MML

Mechanic's Liens (Statutory Liens for Services, Labor or Material)

Insurance against mechanic's liens is a major source of claims in our industry. Consequently, in order to provide insurance against mechanic's liens to owners (where customary) by deletion of the standard exception, you must verify compliance with the Company's underwriting guidelines for determining that all work is paid for or that none was done on the entire "project" (e.g., condominium regime). To furnish coverage to a lender, you must follow similar guidelines. However, if the loan relates to contemplated construction, the Company's guidelines are contingent upon analysis of state law (given the different rules of priority); in some states, the Company requires compliance with detailed procedures and/or special pending disbursement clauses; in some locations, the Company prefers to issue a construction loan policy (without endorsement) or use the standard mechanic's lien exception.

Requirement

MMLR01 STG

Require Statutory Notice of Completion

The Company will require the recordation of a notice of completion in accordance with applicable law and expiration of the appropriate lien period prior to the issuance of its policy of title insurance.
Comment: In some states, a notice of completion will begin the time deadline for lien filing. If so, it is customary to require the correct notice of completion and passage of time to file liens. In some states, the Company also requires an inspection to verify completion.

MMLR02 STG

Inspection to Determine No Commencement

The Company requires a satisfactory inspection of the land to be made at, or immediately prior to recording the mortgage to be insured. If the inspection discloses any evidence of commencement of a work of improvement, either on-site or off-site, the coverage for mechanic’s lien insurance will be deleted from the Policy, unless all the necessary documentation for indemnification has been submitted to the Company (including audited financial statements, draw procedure, all loan documents, any required subordinations, and bonds) and the indemnification has been formally approved by the Company, prior to the recording of the mortgage.
Comment: In some states, it is possible to determine that a construction loan has priority if no work commenced prior to recording of the mortgage. If that fact is not confirmed, the Company requires detailed financial analysis.

See Underwriting Manual

MMLR03 STG

Require Statutory Bond for Recorded Lien

The Company requires for its review a satisfactory statutory bond against that mechanic’s lien recorded ____________.
Comment: Many states establish a statutory procedure to bond around a lien claim and remove it as a lien. Even if state law is met, you must be cognizant of liens that may later be filed by other contractors or subcontractors.

See Underwriting Manual

MMLR04 STG

Require Statutory Bond for Project

The Company requires for its review a satisfactory statutory bond against mechanic’s liens.
Comment: Many states establish a statutory procedure to file a bond relating to a general contract and effectively prevent recordation of mechanic’s liens. The Company must approve reliance in whole or part on this bond: there may be other contracts; the general contractor may still file a lien; the bond may not be correct; or the bond may be modified to name Stewart Title Guaranty Company as an obligee.

See Underwriting Manual

MMLR05 STG

Require Release

Mechanic’s lien claim by ____________, in the amount of ____________, recorded ____________. The Company requires for its review and recordation a satisfactory release of said lien.
Comment: If a lien claim is filed, this may be a red flag indicating other possible lien claims not yet filed.

[itemize]

Note: You may add additional local requirements here. Please consult with our underwriting personnel in preparing appropriate provisions.

Exception

MMLX01 ALTA

Notice of Intention to File

Notice of intention to file a statutory lien for services, labor or material in the amount of $___________, plus interest, executed by _____________ recorded ____________.
Comment: Some states require the filing of a notice of intent as a prerequisite to later lien claim perfection. This may be a red flag indicating other possible claimants.

MMLX02 ALTA

Statutory Lien for Services, Labor or Material

A statutory claim of lien for services, labor or material recorded _______________.
Claimant:
Amount $__________ and any other amounts due thereunder.
Comment: If a lien claim is filed, this may be a red flag indicating other possible lien claims not yet filed.

MMLX03 ALTA

Specify Possible Statutory Lien for Services, Labor or Material

A possible statutory lien claim for services, labor or material by _______________, in the amount of __________, as evidenced by document, recorded _____________.
Comment: An invoice, letter, other document or communication may evidence a claim not yet perfected. If so, you must except to the possible claim. This possible claim may be a red flag indicating other possible lien claims not yet filed.

MMLX04 ALTA

Suit to Foreclose Statutory Lien for Services, labor or Material

A notice of pendency of action to foreclose a statutory lien for services, labor or material recorded _________
Court:
Case No.:
Plaintiff:
Defendant:
Attorney Information:
Name:
Address:
Phone:
Comment: You must except to a known suit to foreclose mechanic’s lien, even if no lis pendens is filed. You must be aware of other possible lien claims that are disclosed by the suit or that may be filed on the project.

MMLX05 ALTA

Judgment Ordering Foreclosure of Statutory Lien for Services, Labor or Material

A judgment ordering foreclosure of mechanic's lien, recorded ______________
Court:
Case No.:
Creditor:
Attorney Information:
Name:
Address:
Phone Number:

Comment: If a judgment orders foreclosure of a mechanic’s lien, you must be aware of other possible lien claims disclosed by the suit or that may be filed on the project.

MMLX06 ALTA

Statutory Notice of Commencement

Any lien, or claim of lien, for services, labor or materials by reason of that notice of commencement executed by ______________, and recorded ______________.
Comment: In some states, mechanic’s liens will relate back to the notice of commencement and prime the construction loan mortgage.

MMLX07 ALTA

Notice of Non-responsibility

Any lien, or claim of lien, for service, labor or materials as evidenced by that notice of non-responsibility executed by ____________, and recorded ______________.
Comment: In some states, a notice of non-responsibility may give rise to mechanic’s liens.

MMLX08 ALTA

Statutory Lien for Services, Labor or Material (Inspection)

Any lien, or claim of lien, for services, labor or materials arising by reason of any work of improvement now in progress or recently completed, as disclosed by an inspection
Comment: If an inspection discloses that work has commenced, use this exception. Future mechanic’s lines may have priority over the insured mortgage, and may attach prior to Date of Policy.

MMLX09 ALTA

Notice of Completion

Any lien, or claim of lien, for services, labor or materials arising by reason of a work of improvement, as disclosed by a notice of completion recorded ______________.
Comment: Use this exception if a notice of completion has been recently filed, unless you determine that the time for filing mechanic’s liens has conclusively passed under state law..

MMLX10 STG

Mechanic’s Lien

Mechanic’s lien claim by ____________, in the amount of ____________, recorded ____________.
Comment: If a lien claim is filed, this may be a red flag indicating other possible lien claims not yet filed.

Note: You may add additional local exceptions here. Please consult with our underwriting personnel in preparing appropriate provisions.

MMLX11 STG

Mechanic's Lien Claims of any Tier By, Through or Under the Insured

Any lien or claim of lien arising by reason of unpaid bills or claims by claimants of any tier for services, labor or materials furnished in connection with any work or improvement placed or to be placed upon the Land by, through, or under the Insured.

Comment: Use this exception if this is the potential for liens or claims of liens from claimants of any tier in connection with improvements placed or to be placed on the Land by, through, or under the Insured.

MMLX12 STG

Mechanic’s Lien Claims of any Tier for the Benefit of Insured

Any lien, or right of a lien, by claimants of any tier, for services, labor, material or equipment, heretofore or hereafter furnished to or for the benefit of, or contracted for or assumed by, the Insured, or any affiliate, subsidiary, or agent of the Insured, and imposed by law and not recorded in the Public Records.