Missouri Legislature Passes Controversial Changes to Mechanic’s Lien Law

On the last day of the 2010 state legislative session, the Senate Committee Substitute for House Committee Substitute for House Bill 2058, commonly referred to as the Mechanic’s Lien bill, was given final approval.

Proponents of the bill said such changes must be 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 threatened to cease offering mechanic’s lien coverage on new homes in Missouri. Other groups argued that the requirement to file a notice of rights is not only logistically challenging but also ultimately drives up the cost of housing because of the recording fee and additional staff time/travel associated with such filings.

Among other provisions, the bill includes:
-Lien litigation reform. The paperwork and therefore legal fees and costs are intended to be reduced by this bill.
-Contractors, subcontractors, suppliers must file a notice of rights prior to starting work.
-Filings provide notice to title companies.
-It is residential only. There is no effect on commercial work.

To download the full bill text click here.