BarbriSFCourseDetails
  1. keyboard_arrow_leftBack

Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Real Property - Finance

Date & Time
  • event Date

    Wednesday, March 26, 2025

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00

This CLE webinar will explore the increased risks construction lenders face with respect to mechanic's liens, stop notices, and payment bonds. The panel will review the varying state laws on lien prioritization and safe harbors and provide practical suggestions for mitigating risks by leveraging title insurance and other means.

Faculty

Horowitz Heather
Shareholder
DLA Piper

Ms. Horowitz focuses her practice on commercial real estate finance. Her clients include investment banks, private equity funds, in-bound overseas investors, and other institutional lenders. She guides them through the origination and/or acquisition, disposition, and restructuring of mortgage and mezzanine construction, bridge, balance sheet, and securitized loans secured by various asset classes throughout North America. Ms. Horowitz’ experience encompasses not only loan origination and syndication, but workout and restructuring of existing facilities as well. She represents lender interests across the capital stack and has extensive experience in the drafting and negotiation of co-lending and intercreditor agreements. Additionally, Ms. Horowitz has significant experience advising lenders and investors with the financing and refinancing of loan facilities secured by hospitality and lodging portfolios. She also has extensive experience with construction lending.

expand_circle_down Expand to View Full Bio expand_circle_up Collapse Bio
Escobar Jeffrey
Shareholder
Troutman Pepper Locke LLP

Mr. Escobar advises lenders, sponsors, investors, project companies, public and private utility companies, private equity funds, joint ventures, institutional owners, and developers across the U.S. and the Americas. He assists clients in deploying capital for debt and tax-equity project financing, M&A, development, and sale-leaseback of large-scale renewable energy and energy transition projects. This includes solar, wind, geothermal, green hydrogen, and alternative energy, as well as battery energy storage, infrastructure, and transportation projects. Mr. Escobar leads complex project financed infrastructure, renewable energy, and energy transition-related projects; guides large commercial real estate development and construction finance, design, engineering, and construction transactions; manages real estate development and construction concerns of energy, infrastructure, transportation, commercial, energy transition, and renewable energy projects; navigates real estate and construction concerns in public-private partnerships; provides project support and claims dispute avoidance; and mitigates real estate and environmental risks.

expand_circle_down Expand to View Full Bio expand_circle_up Collapse Bio

Description

Construction lending is rife with many potential risks. The laws governing mechanic's liens vary by state and are often misunderstood. It is imperative that a construction lender determine when a mechanic's lien attaches to the subject property and whether a mechanic's lien is considered superior to other liens in order to take appropriate actions to protect their lien priority.

Lenders can protect their lien priority by leveraging title insurance policies and endorsements to mitigate the risks of mechanic's liens. To avoid gaps in coverage, lenders should require the title company to record the construction mortgage as a first priority lien on the borrower's property and request a "date down endorsement" every time they make a disbursement to ensure that a mechanic's lien hasn't been recorded since the last disbursement.

While mechanic's liens are available in all states, some states like California, Alaska, Arizona, and Washington also allow stop notices, which can be even more problematic to a construction lender. Stop notices allow a subcontractor or supplier to notify the property owner and lender that they are owed money and to withhold a portion of the construction funds until the debt is paid. If a lender has not yet disbursed all the funds from the construction loan and is served with a stop notice, the lender is required to withhold the claimed amount or the lender may be liable for the claim.

Listen as our authoritative panel discusses the lending risks associated with construction loans and provides practical suggestions for mitigating these risks.

Outline

  1. Overview: increased risks construction lenders face with respect to stop notices, mechanic's liens, and payment bonds
  2. Mechanic's liens and the varying state laws on lien prioritization
    • First in time, first in right rule
    • Lien attaches when work begins
    • Blanket priority over all preexisting liens
    • Safe harbor protection for lenders
  3. Stop payment notices
  4. Payment bonds
  5. Leveraging title insurance to mitigate risks
  6. Understanding the gaps in title insurance coverage
  7. Other ways lenders can protect their lien priority
  8. Key takeaways and practice pointers

Benefits

The panel will discuss these and other key considerations:

  • What are the key transactional risks associated with construction lending?
  • How does the priority of mechanic's liens differ from state to state?
  • What are stop payment notices and what states allow them?
  • How can construction lenders leverage title insurance and endorsements to mitigate risks and what gaps exist in coverage?
  • What are other ways lenders can protect their lien priority?