A construction project includes many contractors, suppliers and vendors; each providing one or more components of what will be a completed structure. Our sister company, Q-Draw, ensures that the work has been completed and the mechanic’s liens collected from the suppliers and contractors, before payment is issued. This protects the owner, the borrower, the builder and the lender from erroneous billings, as well as the unexpected incidents of fraud that unfortunately can and do occur.
Banks lending money on residential or commercial construction projects need to make sure that no intervening liens — in this case, “mechanic’s liens” — are filed against the subject real estate at any point before the borrower pays the loan in full. Construction disbursing is the process of incrementally paying contractors, sub-contractors and material suppliers to minimize the risk of a contractor filing a lien on the property for non-payment of any amounts due.
True Title and its “sister company,” Q-Draw, Inc., work in concert to perform the construction disbursing role in a stream-lined and efficient manner, and the process really is a “collaboration” between True Title and Q-Draw.
Before authorizing the bank to release loan funds to pay the various contractors on a project, Q-Draw confirms receipt of all “lien waivers” and other documentation to confirm that all persons entitled to payment have been identified and acknowledged by the owner of the property and the “general contractor” in charge of the overall construction project.
By diligently working to identify any-and-all persons entitled to payment for work performed, and then by obtaining the lien waivers and other written documentation, Q-Draw is working on the lender’s behalf to minimize the risk of a mechanic’s lien filing that could slow down the construction project or even undermine the project’s long-term viability.
As each disbursement is made on the projects — disbursements also knows as “draws” — True Title issues a “endorsement” to the lender’s title commitment increasing the amount of title coverage for mechanic’s liens to the full amount of all funds disbursed through the applicable date.