Mechanic's liens
A Mechanics' Lien may be made by a person
providing work, materials or services to improve
real property. Thus, delivery men, lumber yards,
surveyors, inspectors or others besides the actual
contractors or construction workers can file such
a lien.
The claim of the lien starts when the work is
commenced or when the goods or services are
delivered. For example, if the materials are
delivered before the construction loan deed of
trust is recorded, then the Mechanics' Lien is
actually senior to that deed of trust. If the
Mechanics' Lien was not paid and the lien
foreclosed, the deed of trust would be "wiped
out" and that loan would no longer be secured
by the real property. As a title company insuring
a construction loan, we would inspect the
property before recording the deed of trust to
assure ourselves that no work has been
commenced or delivery of any goods or services
accomplished.
How a title company will handle each instance
of a recorded Mechanics' Lien will vary,
depending upon the individual situation. Some
options may include requiring a bond holding money pending
resolution of the claim, or various indemnity
agreements. Each case must be evaluated
individually.
For further information on this subject or when
faced with a Mechanics' Lien, legal counsel
should be obtained.