Bulletin: MI2011006

Date:
August 17, 2011
To:
All Michigan Issuing Offices
RE:
Jeddo Drywall v. Cambridge Investment Group

Dear Associates:

Please be advised that on August 2, 2011, the Michigan Court of Appeals published an Opinion on the above-captioned case (Jeddo Drywall, Inc. v. Cambridge Inv. Group, Inc., 2011 Mich. App. LEXIS 1427 (Mich. Ct. App. Aug. 2, 2011)). The Court held that construction lien claimants, providing work or materials on a single lot in a subdivision, have priority back to the date of the first work performed on the entire project (infrastructure work/ grading, etc…) even though there may be:

  • a change in the ownership/developer of the project, or

  • a change in the general contractor, or

  • multiple phases to the project 

            While the Court recognized the potential effect on construction financing for projects, it concluded that the lender could protect itself by recording its mortgage before first physical improvement and can retain priority for subsequent advances by relying upon sworn statements and waivers as provided in the Construction Lien Act. 

As a result, the Company will be unwilling to insure any new construction loans (infrastructure loans) on condominium or multiple lot/ building site projects unless it can be established to the Company’s satisfaction that the mortgage will be recorded prior to any actual, physical improvement to the property.  [Note: The requirement herein for the mortgage to be recorded prior to first physical improvement for infrastructure loans is not required to insure individual or single lot/building site construction loans.  Please see Bulletins MI2009009 and MI2010007 for the Company procedures.]  

As provided in our prior Bulletins (MI2009009 and MI2010007), it is mandatory that sworn statements and waivers be secured on all construction projects and written Company approval is required on all construction loan transactions.   

This Bulletin relates solely to the State of Michigan.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.     

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.