Release of Lien Bonds
What are Release of Lien Bonds?
When a mechanic’s lien is filed against real property, most states have laws that allow a release of mechanic’s lien bond to be filed with the county recorder’s office in order to release the property from the claim thereby clearing the title. The bond will take the place of the mechanics lien on a property.
The bond amount required varies from state to state, and is generally 125% – 150% of the lien amount.
How to Apply for a Release of Lien Bond
The process for obtaining a release of lien bond requires the following information from the applicant:
- An Application
- Copy of Mechanic’s Lien
- Explanation of the Circumstances
- Financial Statement from Applicant
These bonds are considered to be a financial guarantee, and they are underwritten very conservatively by surety companies. Therefore, the applicant must have a substantial financial wherewithal relative to the required bond amount to show they can easily satisfy any judgment that may result by foreclosure on the lien. Otherwise, collateral may be required as a condition for approval.
When Collateral is Required
For those situations where collateral is required, clients have four options for the type of collateral they can post.