MML

Mechanic's Liens

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.
References
For more information, see
in this Manual.
See Underwriting Manual,

12.12   Mechanic's Liens

15.32   Pending Disbursement Clause

17.36   Residential Title Policies

3.44   Construction Loan Policies

5.32   Extended Coverage

5.36   Extrahazardous Risks

9.04   Indemnity Agreements

Requirement

MMLR01 STGC

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 STGC

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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

MMLR03 STGC

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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

MMLR04 STGC

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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

MMLR05 STGC

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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

17.24   Releases

5.32   Extended Coverage

Exception

MMLX01 ALTA

Notice of Intention to File

Notice of intention to file a mechanic’s lien 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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

5.32   Extended Coverage

MMLX02 ALTA

Mechanic’s Lien

A claim of mechanic’s lien 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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

5.32   Extended Coverage

MMLX03 ALTA

Specify Possible Mechanic’s Lien

Possible mechanic’s lien claim 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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

5.32   Extended Coverage

MMLX04 ALTA

Suit to Foreclose Mechanic’s Lien

A notice of pendency of action to foreclose a mechanic’s lien, 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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

5.32   Extended Coverage

MMLX05 ALTA

Judgment Ordering Foreclosure of Mechanic’s Lie

Judgment in favor of ______________ under Case or Docket Number __________ ordering foreclosure of mechanic’s lien described therein.
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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

5.32   Extended Coverage

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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

MMLX08 ALTA

Mechanic’s Lien (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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

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 STGC

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.
References
See Underwriting Manual,

12.12   Mechanic's Liens

5.32   Extended Coverage

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