Chicago Title NCS Chicago: SYFCREC 2021

Surviving Your First Commercial Real Estate Closing I Mechanic’s Lien Risks & Construction Escrow Construction Coverage Covered Risk 11(a) insures the lack of priority of the lien of the Insured Mortgage a) as security for each and every advance of proceeds… over any statutory lien for labor, services, or material arising from construction of an improvement… when the improvement is either (i) contracted for, commenced on or before Date of Policy; or (ii) contracted for, commenced or continued after Date of Policy, if the construction is financed in whole or in part by proceeds of the loan secured by the Insured Mortgage that the Insured has advanced or is obligated on Date of Policy to advance 7 Surviving Your First Commercial Real Estate Closing I Mechanic’s Lien Risks & Construction Escrow Construction Lenders - Illinois o 770 ILCS 60/1 – mechanic’s lien attaches as of the date of contract with the Owner o Mechanic’s lien claim has priority for unpaid contract amount if contract with Owner is prior to recording of mortgage o 770 ILCS 60/16 – if a mortgage is recorded prior to the contract, the Lender gets paid a percentage of the foreclosure proceeds allocated to the Land and pre-existing improvements, then the lien claimants receive payment from proceeds to the extent the work enhanced the value of the property 8 7 8 77