The most dangerous of these situations regarding unfiled lien coverage is when construction has recently been completed and the time for filing liens has not yet passed. This situation is more dangerous in that, unlike the other two, the knowledge that work or construction has been performed is certain; the only question is whether all those who are owed money have been paid. Affidavits and Indemnity Agreements in these circumstances are even more self-serving.
The Company will, however, allow the non-record mechanics’ lien exception to be removed from loan policies when construction has just been completed. Within this category, there are two situations with separate rules. In instances where the owner of the property has recently completed remodeling existing improvements and is either refinancing or selling, the Company will rely on a standard lien affidavit, discussed previously. In instances where a contractor or individual is selling a new house, please call Agents National Title underwriting counsel for guidelines to be followed in the agent’s particular region. Upon authorization from Agents National Title, a Contractor’s/Owner’s Affidavit may be acceptable. In some cases, provision of mechanics’ liens coverage during or soon after construction is completed may require more extensive investigation, review of lien waivers or releases, evaluation of financial states of owners, contractors, or other indemnitors, or other procedures to control risk. Consult your Agents National Title underwriting counsel for instructions concerning this coverage.