Pub. 11 2016-2017 Issue 1

May/June 2016 29 Extraordinary Service for Extraordinary Members. The purpose for creating a construction security interest is that the Lien Act protects a bank’s priority in subsequent advances if the advance is made for improvements to the property and if the advance is made under a construction security agreement. recorded by the register of deeds first. However, good advice would be to ensure that the register of deeds records the deed of trust first. The Lien Act contains some very specific requirements for the notice of commencement. Among other things, the notice must be signed by the contracting owner (typically the borrower); must be identified as a notice of commencement; must describe the real estate being improved; andmust state that “if, after the notice of commencement is recorded, a lien is recorded as to an improvement covered by the notice of commencement, the lien has priority from the time the notice of commencement is recorded.” See Neb. Rev. Stat. § 52-145. At times, Nebraska courts have strictly construed the Lien Act, so a lender would be wise to adhere to the requirements set forth in § 52-145. Step 4 – Make Disbursements Finally, the lender can begin its construction loan disbursements. However, a prudent lender may want to get an updated title report before making any disbursements to ensure that no liens were recorded prior to the lender’s recording of the notice of commencement. In conclusion, by following these steps, you can greatly reduce the risk that a construction lien will have priority over your bank’s loan. However, this guide is not intended to cover all situations encountered in financing a construction project and is not a substitute for reading and understanding the relevant statutes.  For more information, contact Brian Koerwitz at Endacott Peetz & Timmer PC, LLO at (402) 904-3629. Koerwitz represents both community banks and construction professionals. Reach your target audience a ordably. advertise get results DON BROWN Advertising Sales 813.423.1429 donfbrown@verizon.net