Mechanic’s Lien Coverage Requires Underwriter Approval.

NOTE:  The Wyoming Legislature significantly revised the Mechanic’s Lien Statutes in the 2010 legislative session by the passage of S.F. 25.  The revised statutes became effective July 1, 2011.

The revised statutes include model forms for lien filing, completion of work and release are found under W.S. 29-10-101 et seq.

Priority

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

Construction loan mortgages that are properly filed before commencement of construction work or repair of the premises or property have initial priority over mechanic's liens. W.S. 29-1-402(c)

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

There is no statutory or case authority providing for priority as to future disbursements under a construction loan mortgage in Wyoming. However, a reading of W.S. 29-1-402(c) which states that a perfected mortgage recorded prior to the time a mechanic's lien attaches has priority over a subsequently recorded mechanic's lien. If the mortgage is recorded prior to the time work is commenced at the site or materials furnished, it seems to follow that any advances under the mortgage should have priority over mechanic's liens.

If priority is lost, can it be regained?

There is no statutory authority for regaining priority once it is lost. However, W.S. 29-1-403 states, that if 180 days does not elapse between the date of performance of any work or furnishing of any materials and the date of when work or materials are next performed, it shall be considered as having been done under the same contract. Therefore, it follows that when there is a 180 day lapse, priority is regained over later performed work or materials supplied.    

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

Under W.S. 29-2-101, every contractor (definition includes architect, professional engineer and surveyor), subcontractor or materialman performing any work on or furnishing any materials  for any building or any improvement upon real property shall have for his work done or plans or materials furnished a lien upon the building or improvements, and upon the real property of the owner on which they are situated to the extent of 1 acre or all the additional real property in excess of 1 acre where the improvement is located. A prerequisite for claiming a lien is that the work or materials must be furnished under a contract. Both on-site and off-site work is covered by this statute. Therefore, there is no real statutory difference between on-site and off-site work.

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

W.S. 29-1-402 sets out that all mechanic’s liens provided for under the Wyoming statutes are of equal dignity regardless of the date that the lien statements are filed of record.

Time Limits

What are the time periods for recording lien claims by original contractors and subcontractors?

Any contractor must file their lien within 150 days of the completion of their work, and every other person asserting a lien (i.e., subcontractors, materialmen, laborers, etc.) must file their lien within 120 days of the earlier of: (A) after the last day when work was performed or materials furnished under contract, (B) from the date of substantial completion of the project on which work was performed or materials were furnished under contract; or with respect to a subcontractor, after the last day he performed work at the direction of the contractor or other person authorized to provide direction.

However, any party to a contract for which a lien may be filed may agree to an extension of the time within which the lien may be filed. The time agreed upon may not exceed twice the time within which the lien would have to be filed (i.e. 300 days contractor and 240 days all others). The extension agreement must be acknowledged before a notary by the owner, contractor, and any other parties to the contract, and then recorded in the real property records.

W.S. 29-2-106 After what period of time can you waive a mechanic's liens if no suit is filed?

According to W.S. 29-2-109, all actions to foreclose or enforce a lien must be commenced within 180 days after the filing of the lien statement.

Removing or Waiving Liens

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

Yes, the owner can record a Notice of Substantial Completion of the project in the real property records. As long as the owner sends a copy of the notice within 5 days of recording to all contractors, subcontractors and materialman that provided the owner a preliminary notice (as required under W.S. 29-2-112), then the recording date of the notice is presumed to be the date of substantial completion for the project. W.S.29-2-106(c)

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

W.S. 29-1-501 provides that the owner, contractor or subcontractor can deposit a corporate surety bond, letter of credit, cash or cash equivalent in an amount equal to 1½ times the amount of the lien with the clerk of the district court in the county where the lien was filed. Upon depositing the security and entry of an order of the court accepting the security, the lien against the property is discharged and released in full. The clerk of court shall issue a Notice of Satisfaction of Lien which the owner or lien claimant may record in the real property records to show that the lien has been satisfied.

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

Waivers or subordinations by the general contractor and subcontractors effectively subordinate mechanic's liens to the lien of the construction mortgage. Model form for lien waivers is found under W.S. 29-10-101.

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

There is no statutory authority relating to bona fide purchasers or lenders.

Title Company Requirements

What are the customary requirements for issuing Loan Policies on construction loan mortgages?

The procedures set out in Stewart Multi-State Bulletin MU2010008 apply in Wyoming when mechanic’s lien protection is requested. 

Is it customary to add a "pending disbursement" clause or mechanic's liens exception in the Loan Policy insuring a construction loan mortgage?

Yes, a "pending disbursement" clause is added to the loan policy. In situations where there is broken priority and the title company does not feel that mechanic lien coverage is an acceptable risk or where no mechanic lien coverage is requested, a mechanic lien exception will appear in the loan policy. The procedures set out in Stewart Multi-State Bulletin MU2010008 may be applicable.

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