Bulletin: NC2014001

Date:
August 04, 2014
To:
All North Carolina Issuing Offices
RE:
UNDERWRITING - North Carolina Mechanic's Lien Coverage on Recently Completed Construction

Dear Associates:

N.C.G.S. 44A-11.1 created a mechanic’s lien agent system and became effective April 1, 2013. Every private project of $30,000 or greater, excluding improvement to single family residences, requires owner/borrower to select a lien agent to maintain record of all potential lien claimants on the project.

Owner/borrower or the contractor selects the lien agent and notices necessary parties. If a building permit is issued for the project, then the permit must identify the lien agent and the permit must be conspicuously and continuously posted on the site.

A contractor or sub-contractor must, within 3 business days of contracting with a supplier, provide the name of the lien agent to the supplier. Potential lien claimants (PLC) must serve a Notice to Lien Agent that contains the lien claimant's name, address, phone, electronic address, description of real property and claimant’s potential lien rights. This must be served on the lien agent within 15 days of the first furnishing of labor or materials. If the PLC does not file with the lien agent, their rights could be terminated (to a BFP) or subordinated (to lien of a deed of trust).

All Appointments of Lien Agent and Notices to Lien Agent are made through a single on-line website: www.liensnc.com.

As a result of the changes to NC lien law, this bulletin clarifies the requirements of insuring a recently completed construction transaction.

You are hereby authorized to issue Owners and Lenders title insurance policies deleting the standard mechanic’s lien exception if all of the following conditions are met:

  • The transaction is for a sale or refinance of recently completed construction commenced on or after April 1, 2013.
  • Owner(s) provides NCLTA Form 5 (Owner Affidavit).
  • The closing agent has reviewed www.liensnc.com to confirm appointment of the lien agent and any notices to lien agent filed by potential lien claimants in accordance with Chapter 44A. If the lien agent selected is not a title insurance underwriter, please contact Underwriting Counsel.
  • Potential lien claimants provide NC Land Title Association lien waiver (NCLTA Form 6) and/or lien subordination forms (NCLTA Form 7).
  • Issuing Title Agent has used NCLTA approved requirement on all NC commitments.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

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.

References

Bulletins Replaced:
None
Related Bulletins:
NC2013002 LEGISLATIVE UPDATE - North Carolina Mechanic Lien Agent
 
NC2013003 LEGISLATIVE UPDATE - North Carolina 2013 Legislative Update
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None