Insurance against mechanic's liens is a major source of claims in our industry. Consequently, in order to provide insurance against mechanic's liens to owners (where customary) by deletion of the standard exception, you must verify compliance with the Company's underwriting guidelines for determining that all work is paid for or that none was done on the entire "project" (e.g., condominium regime). To furnish coverage to a lender, you must follow similar guidelines. However, if the loan relates to contemplated construction, the Company's guidelines are contingent upon analysis of state law (given the different rules of priority); in some states, the Company requires compliance with detailed procedures and/or special pending disbursement clauses; in some locations, the Company prefers to issue a construction loan policy (without endorsement) or use the standard mechanic's lien exception.
Comment: Use this exception if this is the potential for liens or claims of liens from claimants of any tier in connection with improvements placed or to be placed on the Land by, through, or under the Insured.
Any lien, or right of a lien, by claimants of any tier, for services, labor, material or equipment, heretofore or hereafter furnished to or for the benefit of, or contracted for or assumed by, the Insured, or any affiliate, subsidiary, or agent of the Insured, and imposed by law and not recorded in the Public Records.