This month's installment of Dirt Tales again deals with the topic of the new NCLTA Mechanic's Lien Forms. In last month's article we discussed the three forms and the appropriate situation to use each. This month's article deals with another aspect of the forms and that is their exclusivity and copyright status.
The new forms are copyrighted and contain a statement to the effect that they cannot be changed or amended without the written permission of the Company (read, title insurance underwriter). All too often when a lien form is sent out of state the seller's attorney will want to modify the form to conform to local practice or to remove language in order to protect their client. This is no longer permissible and if the form is modified in this manner it will not be acceptable to the title company.
The second thing I want to mention about the new forms is that they are exclusive, meaning they are the only type of lien waiver forms that title companies will now accept. Until the industry standardized forms it was common for title companies to accept custom crafted lien waivers as long as they contained the appropriate language and indemnities. Now, regardless of how they are written title insurance underwriters will not accept any custom drafted forms nor will they accept any of the old forms for the purpose of removing the mechanics lien exception from title policies. If a custom drafted form is presented or if one of the old forms is used it will be rejected and an exception as to matters of mechanics liens will be placed in the title policy. This exception may be deleted upon certification by the certifying attorney that the statutory mechanic's lien period has expired. At first blush this policy may seem harsh, but the industry has been inundated with a barrage of mechanics lien claims in recent years and standardization of the forms becomes necessary in order to reduce some of these claims.