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Committee approves bill to limit mechanic’s-lien priority over construction lenders
Summary
The House Insurance & Commerce Committee passed House Bill 12 71, which narrows which contractors and suppliers can claim priority over construction lenders by creating an affidavit process and limiting the doctrine of "relation back" for construction loans.
House Bill 12 71 won committee approval after lawmakers and industry witnesses described it as a targeted fix to Arkansas mechanics-lien rules that currently can leave construction lenders in last place when construction begins before a loan is recorded.
The bill would let a construction lender record an affidavit of noncommencement and, if an inspector hired by the lender files that affidavit within a narrow window around the mortgage recordation, preserve the lender’s priority over future lien claimants. It would also remove the…
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