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A lien is a mechanism used by contractors and suppliers to force payment of outstanding monies due from the owner, tenant or landowner. A Mechanic’s Lien will assure that the owner completes all required payments to the contractors participating in the project. It is also sometimes called a ‘material man’s lien’ or a ‘supplier’s lien’ which can be confusing. They are, in fact, the same thing.

What is a Mechanic’s Lien Release Bond?

A Mechanic’s Lien Release Bond is a type of Surety Bond. If a contractor receives no payment for products or services, he or she can file a Mechanic’s Lien, which prevents the other party from selling or transferring the property. It also allows the contractor to sue the other party.

With a Mechanic’s Lien Release Bond, the surety company guarantees the claim in the event that the court enforces the payment of the claim. It guarantees that the payment will be made (if the lien is not successfully contested). 

If a subcontractor or other entity has put a Mechanic’s Lien on your property, you can get a Mechanic’s Lien Release Bond to remove it.

How Does a Mechanic’s Lien Release Bond Work?

A Mechanic’s Lien Release Bond allows property owners to proceed as if a lien was not present. They can do as they wish regarding the property: sell it, get the further remodeling done, etc. You can think of it as an extension of credit. The bond proves that the property owner has sufficient funds to pay the people involved. 

It can also be referred to as a Discharge of a Mechanic’s Lien Bond. The word discharge causes some confusion because a discharge of a Mechanic’s Lien Bond (Mechanic’s Lien Release Bond) does not extinguish the Mechanic’s Lien entirely. It merely discharges the lien from the property and attaches it to the bond. 

The bond is usually at a percentage over the lien amount, depending upon the state in which the lien was placed.

Purpose of a Mechanic’s Lien Release Bond

There are a few types of bonds related to the construction industry. Each of them serves a different purpose.

Two common entities that need to obtain Mechanic’s Lien Release Bonds are property owners and contractors who are obliged to discharge any Mechanic’s Liens filed by suppliers or subcontractors. The purpose is to remove the Mechanic’s Lien from real property and the Mechanic’s Lien then attaches to the bond until it is dismissed.

Frequently Asked Questions

Q: Is there only one person responsible for the lien or for the contract?

A: Sometimes. When building a multi-family property all owners could potentially be part of the process and everyone would be responsible for a portion of the claim.

Q: How long does a Mechanic’s Lien last?

A: Once filed, a Mechanic’s Lien will last for a period of one year. Mechanic’s Liens on private commercial projects and on public improvements may be extended for an additional year.

Q: How do I satisfy a Mechanic’s Lien?

A: A satisfaction of a Mechanic’s Lien can be filed with the County Clerk or the public entity through which the lien was filed. That occurs only after you either post the bond or pay off the lien.

When applying, the following information should be included for faster bonding:

1. Provide basic information about the bond being requested and about the principal requesting the bond.

2. Copy of the Mechanic’s Lien – Provide a copy of the Mechanic’s Lien by emailing it to Neil@courtbondnow.com. That will provide information as to the amount of the lien and the parties claiming that payment is still due. 

Call us at 212-227-7277 to speak with a professional regarding your situation or apply below for a quick turnaround on your Mechanic’s Lien Release Bond.

Neil Pedersen
PEDERSEN & SONS SURETY BOND AGENCY, INC.
15 Maiden Lane Suite #800
New York, NY 10038
212-227-7277
800-720-7277
neil@courtbondnow.com

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