Bulletin: MO2009002

Date:
August 17, 2009
To:
All Missouri Issuing Offices
RE:
Mechanic's Lien Coverage and Construction Loans

Dear Associates:

Mechanic's Lien coverage on construction loans is an extra hazardous risk in Missouri. You are not authorized to issue a loan policy on a construction loan unless the Loan Policy contains either a mechanic's lien exception or the following Pending Disbursement Clause.

Pending disbursement of the full proceeds of the loan secured by the mortgage described in Schedule A, this policy insures only to the extent of the amount actually disbursed. This policy insures against loss or damage which results from claims of mechanics' or materialmen's liens arising from nonpayment of bills for labor performed or material furnished prior to ________________, ____, but said coverage is limited to mechanics' and materialmen's liens by those persons or entities receiving said payments directly from the Insured pursuant to written disbursement authorization approved by the Insured herein; except any such liens or notices thereof as may be recited under Schedule B hereof. At the time of each disbursement of proceeds of the loan, an endorsement to this policy must be secured increasing the amount insured hereunder up to the face amount of the Policy, subject to the following requirements being met before issuance of such endorsement:

(a) the Company is furnished evidence from the Insured certifying that each disbursement has been made in good faith and without knowledge of any defect in, or objection to title,

(b) a title search is made by the Company that reveals no liens, objections or any adverse changes in the title,

(c) the contractor and owner furnish the Company satisfactory paid bills, liens waivers, estoppel certificates and other evidence that all items from which a lien might arise, have been paid or otherwise satisfied, and

(d) the Owner and Contractor furnish the Company satisfactory updated Affidavit and Indemnity Agreement(s) as to the matters referred to in (c) above.

This Policy does not insure against mechanics' and materialmen's liens for labor performed and materials furnished subsequent to the last date to which mechanic's lien coverage has been extended, nor does this Policy insure completion of any improvements contemplated by the Owner, Contractor or Insured, or their compliance with plans and specifications. The Company in no way guarantees the sufficiency of the mortgage proceeds as adequate to complete improvements. Notwithstanding any other language contained in the insured provisions of this Policy, the above provisions are the sole provisions applicable to coverage for loss or damage resulting from mechanics' or materialmen's liens or claims therefore not of record.

Any request for deviation from the above Pending Disbursement Clause should be submitted for approval.

If you have questions related to this bulletin, please contact your local underwriting personnel or Stewart Legal Services.

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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.