12.12.17 Mechanic's Liens

Mechanic’s Lien Coverage Requires Underwriter Approval.

Can the Construction Loan Mortgage have initial priority over mechanic's liens?

Generally, construction mortgages will have priority over mechanic's and materialmen's liens provided the construction mortgage was filed prior to commencement of work and provided that any advances made for the purposes of purchasing the land is adequately disclosed on the face of the mortgage. Also, the construction loan mortgage must contain language that advances are obligatory and not optional on the part of the lender. A.C.A. § 18-44-110.

Will initial priority as to future disbursements be retained only if certain procedures are followed?

No information is available at this time.

If priority is lost, can it be regained?

No.

Is there a difference between on-site and off-site work?

There are separate statutes governing surveyors, title insurance and architects' liens. A.C.A. § 18-44-105 provides that an engineering or surveyor's lien does not attach to the land, building, erection or improvement upon land unless and until the lien is duly filed of record with the circuit clerk and recorder of the county in which the land, building, erection, or improvement is located. The recorded lien will be enforced in the same manner as a mechanic's or contractor's liens.

Is priority the same for all contractors and subcontractors on the same project?

Yes. A.C.A. § 18-44-110.

What is the time period for recording lien claims by original contractors and subcontractors?

A.C.A. § 18-44-117 provides that a lien must be filed 120 days after the things specified in this subchapter shall have been furnished or the work or labor done or performed.

After what period of time can you waive a mechanic's liens if no suit is filed?

A.C.A. § 18-44-119 provides that all actions under this subchapter shall be commenced within 15 months after filing the lien and prosecuted without unnecessary delay to final judgment. No lien shall continue to exist by virtue of the provisions of this subchapter for more than 15 months after the lien is filed.

Is there a statutory procedure for affidavits of completion or notices of completion?

No.

Can a statutory bond terminate the mechanic's liens as an encumbrance on the title?

Yes. A.C.A. § 18-44-118(b).

Can the original, general, or subcontractor's contract or waiver agreement subordinate or waive mechanic's liens by general contractor and/or subcontractors?

Whether this is contractually sound has never been ruled upon in Arkansas. There is no statutory authority.

Can a bona fide purchaser or bona fide lender take free of mechanic's liens later filed for earlier work?

No.

Also subject to any bulletins relating to mechanic’s liens.