Mechanic's Lien and Title Insurance?

Question

We were just served lawsuit paperwork stating that an excavating company didn't get paid $114000 when all the homes in our development were being built. This occurred before we purchased the home. They are requesting to be paid this amount and a mechanic's lien to be placed on all of the properties.

We purchased title insurance at closing. Will this protect us from this mess? Can a mechanic's lien still be placed on our home with title insurance? We are so worried that we will have to come up with this money for nothing that we had done.

Answer 1

Notify your title company either directly or through the settlement company that handled your mortgage.

In a development, contractors usually have signed mechanics lien waivers.

Your title insurance policy, even if it is a policy that covers the mortgagee, should protect you from this.

Answer 2

Contact you title insurance company, NOW! If you don’t know the number, call the bank.

Title insurance is there to make sure you have a clear title so they need to be notified. Yes a mechanic’s lien can still be placed on the house with title insurance. The lien and title insurance are two different things.

You did have a lawyer, right? If so call him or her and let them straighten out the mess. If not you’ll need to look to your title company. And you might have to hire a lawyer to clean up this mess. One of the things a lawyer should have required is a release from all the sub-contractors stating they had been paid, or he would have demanded that the money for the house was put in escrow until the contractors were paid. Now if he didn’t do any of this, it would be his problem to sort out.

It sounds like the builder didn’t pay for any of the excavating. So you might have to contact the builder, through a lawyer and find out what’s happening.

Answer 3

better contact your insurance agent, do it soon, you very well could have a lien placed on you house and be responsible for you part of the lien.