HB0335 Treadway, Joseph L

P R E F I L E D

HB 335 -- Mechanic's Liens

This bill prohibits a title insurance agency from issuing title insurance covering possible mechanic's liens on real property for work not yet completed, unless a provision for payment in the form of a bond or cash indemnity deposit of one and one-half times the amount of the construction contract has been secured. A letter of credit or promise to pay will not satisfy this requirement.

The bill also permits a contractor or owner to execute a surety bond or escrow account, approved by and filed with the circuit court, to cover the contract price of any mechanic's liens on real property. Such a bond would discharge any existing mechanic's liens, and suit would be made only upon the bond.

The bill also requires contractors to file with the circuit court a notice of intent to perform labor or provide materials to a specified property, in order to assert a lien against any subsequent purchaser for value. Similarly, if notice of intent to perform is not filed with the court, title insurance agencies would not be required to ensure provisions for payment of such liens. The bill provides the form which the notice should take. The amount of the claim must be listed, if known. If the amount is unknown, the notice may so state; but the contractor must, within 24 hours of receiving a written contract, notify all parties (who have or intend to acquire an interest in the property) of the amount of the claim. Upon receiving payment in full, the contractor must file a statement relinquishing the right to a lien.