Mechanics Lien Coverage

Timing is everything. So it is in life, business…and title insurance. Unlike other forms of insurance—such as property and casualty—which cover future risks (losses that occur after the policy date), title insurance is retrospective, covering liens, encumbrances, and defects that existed or arose before the issuance of the policy. This matter of timing gives rise to mechanic’s and materialmen’s lien issues for owners and lenders. If any work is accomplished or material provided (as defined under a particular state’s lien statute), before the title policy is issued, even if the lien is filed later, the lien takes a superior lien position. This isn’t a problem—as the saying goes—until it is.

Timing also matters in the macro-view of industry trends. Today, the title industry finds itself on the conservative side of the pendulum swing when it comes to mechanic’s lien coverage. Since the recession of last decade—when title insurers dealt with a rash of claims from unfinished development projects—upfront coverage for mechanic’s and materialmen’s liens has been challenging for developers, investors and creditors. When development is planned, or even possible (as in deals that involve raw land), removing the standard exception for “services, labor, or material” liens is anything but straightforward.

Since 2006, Thomas Title has been a national leader in overcoming these title underwriting challenges that exist in new construction and improvement financing. As a national commercial agent for the largest title insurers in the U.S. (First American, Fidelity family, Old Republic and Stewart), our team of attorneys and title professionals underwrite deals internally. We are able to obtain the best coverage, from the best underwriter, for each transaction – quickly and efficiently. This is what comes from the independence and flexibility of being a national multiple-underwriter agency. Not only does our in-house expertise save our clients money on legal fees and other expenses, it saves deals.

It’s time to switch to Thomas. Timing is everything.