Under our current mechanic’s lien statute, a construction lender who records its mortgage prior to the recording of a mechanic’s lien takes priority over the mechanic’s lien. There are three exceptions to this rule. The first exception is in the case of the construction of houses. The second is in the construction of improvements auxiliary to houses. The third is constructing property which is property controlled by a utility. (more…)
Posts Tagged ‘mechanic’s liens’
Court Clarifies Priorities Between Mechanic’s Lienholders and Construction Lenders on Subdivision Improvements
Tuesday, January 3rd, 2012Title Insurance Coverage for Mechanic’s Liens
Tuesday, November 1st, 2011Contractors, subcontractors, owners, lenders and title companies often become intertwined when a party seeks to purchase title insurance coverage for mechanic’s liens. Since mechanic’s liens for most commercial projects may be recorded in Indiana up to 90 days after the completion of work, title insurance commitments and policies have a general exception for “unfiled mechanic’s or materialmen’s liens.” However, in many situations, a title company will agree to delete this exception and thereby insure the owner or lender against such risks.
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To Arbitrate or to Sue?
Thursday, December 16th, 2010There is the rub.
In a recently reported decision in the construction context, the appellate court was faced with what may turn out to be some poor contract management on the part of the parties involved. (more…)
Court Clarifies Priorities Between Mechanic’s Lienholders and Construction Lenders on Subdivision Improvements
Tuesday, November 9th, 2010Under our current mechanic’s lien statute, a construction lender who records its mortgage prior to the recording of a mechanic’s lien takes priority over the mechanic’s lien. There are three exceptions to this rule. The first exception is in the case of the construction of houses. The second is in the construction of improvements auxiliary to houses. The third is constructing property which is property controlled by a utility.
In a recent case, subdivision improvements were constructed. However, there were two important factors that impacted the analysis. First, no houses whatsoever had been built in the subdivision. Therefore, the court found that the exceptions for houses and improvements auxiliary to houses could not apply. Second, the utilities that had been constructed had not yet been accepted by the relevant public utilities. Since ownership of utilities does not transfer until the time of acceptance, the third exception did not apply.
Thus, in this case, the mechanic’s lienholders were junior to the debt of the construction lender. Given the depressed real estate values, it is doubtful that the mechanic’s lienholders received any payment because of a lack of equity to support their lien position.
Author: Terry G. Farmer (bio)
Phone: 812.452.3543
Email: tfarmer@bamberger.com
Court of Appeals Rules That Contractor Cannot Reach Letter of Credit Proceeds
Tuesday, October 5th, 2010In our local area, subdivision regulations require the posting of a letter of credit or other security in favor of the Area Plan Commission to ensure that the developer constructs infrastructure improvements as designed. In a case in which the Bamberger firm represented the lender, the Court of Appeals struck down the attempt of a party standing in the shoes of an unpaid contractor to reach the letter of credit proceeds. The Court found that since the contractor was not a named beneficiary in the letter of credit, it had no rights to obtain these funds. The Court further found that the named beneficiary of the letter of credit, the Area Plan Commission, was the only party entitled to draw on the letters. (more…)
Title Insurance Coverage for Mechanic’s Liens
Tuesday, July 13th, 2010Contractors, subcontractors, owners, lenders and title companies often become intertwined when a party seeks to purchase title insurance coverage for mechanic’s liens. Since mechanic’s liens for most commercial projects may be recorded in Indiana up to 90 days after the completion of work, title insurance commitments and policies have a general exception for “unfiled mechanic’s or materialmen’s liens.” However, in many situations, a title company will agree to delete this exception and thereby insure the owner or lender against such risks. (more…)
Construction Law Forum – Risk Management During Difficult Economic Times
Friday, October 23rd, 2009Join the attorneys at Bamberger for a complimentary forum on the best practices in construction law, where we’ll address various risk management topics and how they relate to the construction, engineering and architectural industries. This informative seminar is scheduled for Tuesday, November 10th from 11:45 a.m. to 1:00 p.m. (more…)