12.12.17 Mechanic's Liens

Mechanic’s Lien Coverage Requires Underwriter Approval.

Priority

Can the Construction Loan have initial priority over mechanic's liens?

A M&M lien attaches when the labor is performed or services or material furnished. However, the lien relates back to the time that the labor, services or material was contracted for. Therefore, a construction mortgage only has priority if the mortgage is properly filed before any labor, material or services are contracted. 10 MRSA 3251

Will initial priority as to future disbursements be retained only if certain procedures are followed?

Unless the construction loan is made by a bank, trust company or savings and loan association organized under Maine law, additional advances made under a construction loan may not have priority over advances made after a creation of a M&M lien contract under which a lien is claimed. However, most recent cases seem to acknowledge that additional advances have priority unless the mortgagee contracted for the work or the work was done with its consent.

If priority is lost, can it be regained?

No.

Is there a difference between on-site and off-site work?

There are no statutory differences between on-site and off-site work.

Is priority the same for all contractors and subcontractors on the same project?

Yes. According to 10 MRSA 3259, all M&M lien claimants participate pro rata..

Time Limits

What are the time periods for recording lien claims by original contractors and subcontractors?

Original contractors do not have to file a lien (10 MRSA 3253) However, subcontractors and other claimants must file a lien within 90 days of the last day that they contributed work to the project. 10 MRSA 3256 extends the lien for another 90 days if the owner dies, is adjudicated bankrupt within the 120 days set aside for filing the original lien claim.

After what period of time can you waive a mechanic's liens if no suit is filed?

Subcontractors' and other claimants' recorded liens continue until 120 days after the last labor was done or material furnished unless an action is commenced to enforce the lien. Although the original contractor does not have to file a lien, the same 120 day time period from the date of the last contribution applies as it does with subcontractors and other claimants.

Removing or Waiving Liens

Is there a statutory procedure for affidavits of completion or notices of completion?

There are no statutory provisions for filing affidavits or notices of completion.

Can a statutory bond terminate the mechanic's liens as an encumbrance on the title?

The owner can bond around the M&M lien claim by petitioning the court for a release of the lien and then obtaining a surety bond in the amount set forth by the court. After filing the surety bond with the court, the clerk gives the owner an attested copy of the pleadings along with a certificate. Both the attested copy and certificate are filed with the registry of deeds and thus vacates the lien. 10 MRSA 3263

Can the original, general, or subcontractors by contract or waiver agreement subordinate or waive mechanic's liens by general contractor and/or subcontractors?

No information available.

Can a bona fide purchaser or bona fide lender take free of mechanic's liens later filed for earlier work?

A bona fide purchaser for value takes free of any lien unless the notice specified in 10 MRSA 3253 or the special notice prescribed in 10 MRSA 3255(2) is properly recorded in the registry of deeds.

Title Company Requirements

What are the customary requirements for issuing Loan Policies on construction loan mortgages?

No information available.

Is it customary to add a "pending disbursement" clause or mechanic's liens exception in the Loan Policy insuring a construction loan mortgage?

No information available.

Also subject to any bulletins relating to mechanic’s liens.