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A fifth difference occurs when determining the amount that each lienholder is entitled to claim. If the improvement is for an agreed upon price, a mechanic's lien cannot exceed the agreed upon sum. If there is no agreed upon sum, the amount of a mechanic's lien is the reasonable value of the work done, skills performed and material provided. A repairman, on the other hand, is entitled to claim a lien for the reasonable charges of work performed and materials furnished. If, however, the repairman fails to notify a recordholder of a mortgage or financing statement before making the repairs (which is often the case), the repairman may only claim the greater of one thousand dollars or twenty-five percent of the property value in its repaired condition.

The final and most significant difference between a mechanic's lien centers around the issue of priorities. Against the owner of the land, a mechanic's lien attaches when the first item or labor is supplied for the beginning of the improvement. N.D.Cent.Code § 35-27-03. Against a purchaser or mortgagee, a mechanic's lien attaches upon the actual and visible beginning of the improvement unless there is notice of the improvement. As against a mortgage given for the purpose of paying labor or material for an improvement, a mechanic's lien will not have preference over the mortgage unless the mechanic files for record a notice of intent to claim a mechanic's lien pursuant to N.D.Cent.Code § 35-27-05 prior to the recording of the mortgage.

With respect to a repairman's lien, it has priority over all other liens, mortgages or encumbrances, as to the repaired property. There is one notable exception to this rule. If the repairman does not give notice to a recordholder of a mortgage or financing statement prior to making the repairs, the repairman only has priority to those persons up to the greater of one thousand dollars or twenty-five percent of the property in its repaired condition.

The previous issue of the Advisor contained an article on requesting consumer reports. Although there is no need to repeat that article in its entirety, it stated that a financial institution could legitimately request a credit report on an individual seeking to borrow funds from the institution. This is a well established and understood practice. However, the scope of that article should now be expanded.

Recently, the question arose as to whether a financial institution could legitimately request a credit report on a principal, officer, owner or personal guarantor of a commercial loan applicant. The FTC issued its answer to this question in an advisory letter dated July 26, 2000, authored by David Medine.

Medine first concluded that a report on an individual in connection with a commercial loan application is a "consumer report" within the realm of the Fair Credit Reporting Act [FRCA]. This opinion is based on the position that the information would be collected for the purpose of assessing credit eligibility. Medine further provides that, although there is authority to the contrary, this is the majority position.

Based on the position that such information constitutes a consumer report, Medine next found that a commercial transaction does not provide a permissible purpose for a consumer report. Section 604(a)(3)(A) of the FCRA provides a permissible purpose when the recipient,

intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to the consumer.

Because the extension of credit must be to the consumer, it is not a permissible purpose to request a report on a principal, officer, owner or personal guarantor when a commercial entity is borrowing the funds.