Mechanics’ Liens or Broken Priority

If Contractor Not Paid

By statute, anyone who furnishes labor or materials for the improvement of real property may file a lien on the property for the value of the services or materials

Broken Priority

Refers to the priority of the lien which is filed Relates back to the date of the work or

delivery of the materials

Mechanics’ Lien

Lien is prior to the interest of a subsequent purchaser or mortgage lender or construction loan advances

Filed after the date of the work or supplying of materials

Lien is not recorded at the time of purchase, mortgage or construction loan advance

Mechanics’ Lien Coverage

If we have broken priority, with the possibility of future mechanics’ liens, title insurer must have A signed indemnity Financials of borrower and/or individual

members/managers/officers of borrower Appraisal to determine how much equity is in

the property Construction contract

Indemnity

A signed agreement whereby one party agrees to secure another against an anticipated loss or damage

Executed by Borrower, individually Borrower (by officer/member/manager of

borrower) If borrower is married, borrower’s spouse

Caution on Construction Projects

Begin work and have materials delivered only after the borrower (and/or lender) closes the transaction and has paid for title insurance