10A —October 13 - 26, 2017 — Insurance/Title — Financial Digest — M id A tlantic
Real Estate Journal
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I nsurance /T itle By Derek Dissinger, Barley Snyder Mechanic’s Liens Laws Between the States: Know the Differences
T he Mason-Dixon Line not only is the imagi- nary border dividing the
enforce the lien. This creates problems for title insurance agencies insuring title to the property because of the uncer- tainty in determining whether every contractor who has done work in the last six months has been paid. For loan policies, Pennsyl- vania has enacted laws to pro- tect banks. The state created exceptions to the priority of a mechanic’s lien for purchase- money mortgages and “open- end” construction mortgages. However, there is still an issue for owner’s policies where the seller built the building being
sold or did substantial renova- tions in the six months prior to the sale. For example, if I buy from you and you stiffed work- ers, the contractor can still file a mechanic’s liens on my house after closing. In this case, title companies need to obtain lien waivers, construction budgets, proof of payment and indemni- ties from sellers and general contractors. But in Maryland and other states, the lien has priority from the date the lien is filed, not when the work was done. For title insurance companies in Maryland, it is fairly easy to
insure throughmechanic’s liens because the title company does a title search, and if there are no liens filed before closing, it can issue insurance over me- chanics lien. In Pennsylvania, it is an issue because the lien would relate to the date the work is done, not when the notice of claim is filed. Familiarity with these issues when entering into agreements of sale can make a future clos- ing much easier. Obtaining lien releases and waivers from contractors and having con- struction budgets available for review can make it much easier to insure through mechanic’s liens. Also, working with a title company that understands the ins and outs of the mechanic’s lien law canmake a transaction much easier on all of the parties to the transaction. Uncertainly regarding what requirements are needed to insure through mechanic’s liens can delay clos- ing for the buyer and seller, and in some cases, cause financing approvals or settlement dates in agreements of sale to expire. If you have any questions about the differences – obvious or subtle – in the laws between Maryland and Pennsylvania, or if you know of a big difference that has caused issues for you that I didn’t write about, please feel free to reach out to me. Derek Dissinger is an as- sociate at Barley Snyder, which has seven offices throughout central Penn- sylvania and Maryland. He is licensed to practice law in both Pennsylvania and Maryland. He can be reached at ddissinger@ barley.com or at 717-553- 1075. n cost-efficient, but when the talent is urban and striving to stay that way, space in a city hub is the better choice. And when business costs equate to 80 percent/employee salaries and 20 percent/real estate, “it justifies the higher cost,” said Vazquez. New York has some of the best talent in the world, and so do California and London. “New York is definitely a talent draw,” said Vazquez. Gradu- ates of the top schools in the nation flock to New York every year to experience all the city has to offer and to learn from the best professionals in their continued from page 2A continued on page 12A By John Vazquez
buyers and sellers and contrac- tors know, mechanics liens and the threat of mechanic’s liens can create uncertainty and cause problems in purchase, refinance and construction loan situations. The key difference between the treatments of mechanic’s liens in different states is when the lien attaches to the real estate. In Pennsylvania, a me- chanic’s lien has priority from the date the contractor “com- mences construction.” From that date, the contractor has six months to file a claim and then there are certain steps to
land of Penn- sylvania and Ma r y l a n d , but also often is the bound- ary between d i f f e r enc es in laws. Buy- ers, sellers, developers,
Derek Dissinger
contractors and banks doing business in both states should be aware of some of the basic differences. As banks, title companies,
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