No More Fixed-Rate Loans On New Homes If Missouri Lawmakers Don’t Act Quickly

Dennis Norman

UPDATE – May 17, 2010 – THANKS TO MISSOURI LAWMAKERS (and the efforts of the Missouri Association of REALTORS and St. Louis Home Builders Association, readers of this post that responded, and others) THE MECHANICS LIEN LAW PASSED!  ASSUMING THE GOVERNOR SIGNS IT INTO LAW FINANCING ON NEW HOMES AS WE KNOW IT HAS BEEN PRESERVED!

This week, which is the last week of the legislative session in Jefferson City, the Missouri Senate will probably take up debate on HB 2058, which is a bill that makes needed changes to the Mechanic’s Lien Statute in Missouri and has already been passed by the House of Representatives.  At a time when we are just now seeing some relief to the “real estate recession” we don’t need another blow to the industry and homeowners, which is exactly what will happen if this legislation is not passed this week.

Without HB 2058 New Home Financing As We Know It Will Be Gone

Over the past three years or so, since the real estate bubble burst, we have had a crisis develop in Missouri with regard to Mechanic’s Liens.  Title Insurance companies have been overwhelmed by claims made as a result of contractors, sub-contractors and suppliers having not been paid for work done on new homes.  During this period flaws in the current Mechanic’s Lien statute have become apparent and need to be changed.

The Missouri Land Title Association has worked to get such changes made in an effort to encourage title insurance companies to continue to offer Mechanic’s lien coverage so borrowers may continue to obtain long-term, fixed-rate mortgages (in which lenders require mechanic’s lien coverage) on new homes.  Without such legislation title insurance underwriters have threatened to cease offering mechanic’s lien coverage on new homes.

Highlights of the bill:

  • Contractors, Sub-Contractors and suppliers would continue to have the right to file mechanic’s liens to assure they are paid for the labor, services and materials however it would require them to file a notice of rights within 60 days to preserve their lien rights.  This would give everyone (homeowners, lenders, title insurance companies, etc) adequate notice to be aware of the potential for a claim and helps identify that claim prior to the closing of the sale so the obligation can be satisfied at closing.
  • Would require a “Final, Unconditional Lien Waiver” by which a contractor, subcontractor, or supplier may release their claim to the home itself, thereby protecting the homeowner, without giving up their rights to collect money they are still owed by the builder or developer.
  • Would protect the new home purchaser from claims for unpaid work from anyone that did not record a Notice of Rights as required.  This will assure that the new home buyer does not get surprised afterward by learning they must pay money to a contractor or company they have never heard of simply because the builder didn’t pay them.

The Industry Supports the Bill:

This bill has the support of the Missouri Association of REALTORS, The Missouri Land Title Association as well as the Home Builders Association.

What You Can Do to Help:

If you would like to assure that good financing will continue to be available for new homes, and to protect the rights of the new home buyer then please call your state senator today and encourage him or her to support HB 2058, or you can simply click here and send a message to your Senator by simply filling in your name and address on the form.

 

 

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