Pub. 12 2015 Issue 3

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S 16 Lien Times for Construction Loan Title Insurance (Changes to Construction Loan And Mechanics Lien Coverage) By Gordon S. Little, Esq. and Stephen J. Rhoades, Esq. C onstruct ion loan demand in New Mexico remains far below the boom period which ended with the “Great Recession” real estate market crash. With limited construction loan activity, some banks and lenders may not yet have real ized two key changes to loan title policy coverage in New Mexico for construction loans. First, the old Construction Loan Policy (former NM 3) no lon- ger exists. Instead, there is a single loan policy (NM 2) which either is time limited (for construction coverage), or is not time limited (permanent coverage). Second, New Mexico adopted ALTA (American Land Title Association) endorsements for mechanics lien coverage on construction loans which allow a title company to issue highly restrictive endorsements for lien coverage. These restrictive en- dorsements were a direct result of the high claims losses paid by title insurers for mechanics’ lien claims arising out of the Great Recession. Those restrictive endorsements can create poten- tial administrative burdens and significant financial risk on the construction lender.