- July 16, 2021
- All Utah Issuing Offices
- UNDERWRITING - Mechanic's Liens Coverage During Construction on 1-4 Family Residential Land
This bulletin replaces bulletin UT2015002 dated April 13, 2015, in its entirety. This bulletin advises you of procedures relating to mechanic's liens coverage on Loan Policies insuring the lien of a trust deed securing a construction loan relating to the construction of a 1-4 family residence. Construction loans would include loans made for rehabilitation, renovation, and the like.
This bulletin applies ONLY to 1-4 family residential property and loans to fund the construction of the same. This bulletin is strictly limited to only construction loans that are for $1,000,000 or less. If the transaction you are working on does not fall within these specific limitations then you must comply with the requirements set forth in Bulletin MU2010008. This bulletin does not apply to commercial property nor to construction loans funding the construction of infrastructure or off-site improvements on residential property.
A Loan Policy insuring a construction loan for $1,000,000 or less secured by a to be built 1-4 family residential property may be issued and the general mechanic's lien exception may be deleted without underwriter approval IF all the following exist:
1) No preliminary notices have been filed on the State Construction Registry against the subject property. (To search the Registry, cut and paste the following web address into your browser: scr.utah.gov). Evidence of the search shall be retained in the file; AND
2) Borrower has executed an STG Indemnity Agreement: Construction with no changes to the form; AND
3) Notice of the Construction Loan is filed on the SCR on date of recording of the trust deed; AND
4) The Loan Policy includes an ALTA 32-06 endorsement or a Pending Disbursement Clause (PDCX08, PDCX06, or PDCX07) exception.
If the transaction you are working on does not meet each of these four conditions or is for more than $1,000,000 or is commercial property or is a development loan then you must follow the procedure outlined in bulletin MU2010008 and an underwriter must approve issuance of the Loan Policy. This means of course that in all cases that do not meet the specific criteria outlined herein a Request for Approval to Issue Overlimits Policy or Extra Hazardous Coverage must be submitted to an underwriter.
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.
- Bulletins Replaced:
- UT2015002 UNDERWRITING - Mechanic's Liens Coverage During Construction (Residential $500,000 and below) [Revised 12-8-20]
- Related Bulletins:
- MU2010008 Mechanic's Liens Coverage During Construction - Initial Priority if No Commencement (3)
- Exceptions Manual:
- Pending Disbursement Clauses