Mechanic’s Lien Coverage Requires Underwriter Approval.

Priority

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

Yes, if the mortgage is recorded prior to Commencement of Construction. CGS 49-3a.

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

Yes. Language in CGS 49-3a must be included in the Mortgage Deed.

If priority is lost, can it be regained?

No.

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

No.

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

No. A mechanic's lien may have priority over another mechanic's lien if there is an intervening encumbrance filed. CGS 49-33c.

Time Limits

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

90 days after completion of work or furnishing of materials. CGS 49-34.

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

One year after the filing of the lien. CGS 49-39.

Removing or Waiving Liens

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

No.

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

Yes. CGS 49-37.

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

No.

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

No.

Title Company Requirements

What are the customary requirements for issuing Loan Policies on Construction Loan Mortgages?

Please refer to Stewart Bulletin MU2010008.

Is it customary to add a "pending disbursement "clause or mechanics lien exception in the Loan Policy insuring a Construction Loan Mortgage?

Please refer to Stewart Bulletin MU2010008.

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