Bulletin: NE2013003

Dear Associates:

An important feature of LB 3, addressed in the prior Nebraska Legislative Update, dated August 5, 2013, was inadvertently omitted from that Bulletin.

Sections 7 through 14 of LB 3 are known and are to be cited as the Commercial Real Estate Broker Lien Act. It is likely that, in the wake of passage of this Bill, title agents will be seeing these liens in the course of their records searches.

The Commercial Real Estate Broker Lien Act provides for a lien in favor of a commercial real estate broker named in a commission agreement, in the amount of a commission due to the broker.

1. Attachment: The lien attaches at the time the broker becomes entitled to the commission specified in the commission agreement, AND a notice of lien must be recorded in the office of the Register of Deeds prior to the actual conveyance or transfer of the subject real estate. In the case of a lease, sublease, or assignment of lease, the broker must record the notice of lien not later than 90 days after the tenant takes possession of the premises.

2. Priority: The lien attaches as of the date of recording of the notice of lien and does not relate back to the time of execution of the commission agreement.

Recorded liens, mortgages, trust deeds and other encumbrances on commercial real estate, recorded before the commercial real estate broker's lien have priority over the broker's lien.

A purchase money lien also has priority over the broker's lien.

A construction lien that relates back to a date prior to the recording of a broker's lien has priority over the broker's lien.

3. Notice: A commercial real estate broker must, within 10 days after recording its lien, provide notice of the same to the property owner via certified or registered mail, to the owner's address reflected in the broker's records. If no address appears in the broker's records, the notice must be sent to the address of the commercial real estate.

4. Release: The record owner of commercial real estate may have the lien released by depositing 115% of the amount of the lien with an escrow agent agreed to by the parties. In the event there is no agreement as to the identity of the escrow agent, the funds may be deposited with the court via interpleader, and upon such deposit, the lien is deemed released from the real estate, and the lien shall attach to the sale proceeds.

Upon written notice to the broker that the funds have been escrowed or deposited via interpleader, the lien shall be considered released. The broker must then, within ten business days, record a lien release in the office of the Register of Deeds.

A person interested in the real estate (owner, holder of a security interest, mortgage, or trust deed) may make written demand upon the broker to institute a judicial proceeding within 30 days after the receipt of the demand. The lien will elapse unless a judicial proceeding to enforce the lien is instituted within the 30 days.

5. Duration: A commercial real estate broker's lien continues to be enforceable for a period of 2 years following recording of the lien, unless a judicial proceeding to enforce is brought within the prescribed period.

The Bill, passed with an emergency clause, became effective on May 16, 2013.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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