Bulletin: UT2015002

Date:
April 13, 2015
To:
All Utah Issuing Offices
RE:
UNDERWRITING - Mechanic's Liens Coverage During Construction (Residential $500,000 and below)

Dear Associates:

This bulletin advises you of new procedures relating to mechanic's liens coverage on Loan Policies insuring the lien of a trust deed on construction loans. Construction loans would include loans made for rehabilitation, renovation, and the like. 

This Bulletin applies ONLY to 1-4 family residential property and loans to fund the construction of the same. This Bulletin is also strictly limited to only construction loans that are for$500,000 or less. If the transaction you are working on does not fall within these specific limitations then you must comply with the requirements set forth in Bulletin MU2010008. This Bulletin does not apply to commercial property nor to construction loans funding the construction of infrastructure or off-site improvements on residential property.

A Loan Policy insuring a construction loan for $500,000 or less secured by a to be built 1-4 family residential property may be issued and the general mechanic’s lien exception may be deleted without underwriter approval PROVIDED:

1)  No preliminary notices have been filed on the State Construction Registry (to search the Registry, cut and paste the following web address into your browser: scr.utah.gov) against the subject property. Agent will retain evidence of this search in their file; AND

2)  Borrower has executed a STG Indemnity Agreement: Construction; AND

3)  Notice of the Construction Loan is filed on the SCR; AND

4)  The Loan Policy includes as an exception a Pending Disbursement Clause (PDCX08, PDCX06, or PDCX07).

If the transaction you are working on does not meet each of these four conditions or is formore than $500,000 or is commercial property, or is a development loan then you must follow the procedure outlined in Bulletin MU2010008 and an underwriter must approve issuance of the Loan Policy. This means of course that in all cases that do not meet the specific criteria outlined herein a Request for Approval to Issue Overlimits Policy or Extra Hazardous Coverage must be submitted to an underwriter.  

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.