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. 

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Using cash as collateral for an appeal bond carries a couple of advantages, such as some sureties paying interest on the cash deposit.
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Marketable Securities ​

Marketable Securities ​

This type of collateral includes stocks and bonds held in non-retirement accounts, as well as mutual funds, exchange-traded funds, and money market funds.
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Bank Letters of Credit

Bank Letters of Credit

A letter of credit is essentially a promise by a bank to pay a beneficiary, in this case the surety company, a specified amount upon demand.
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Real Estate

Real Estate

Real estate is also an option, but there are only two sureties that currently consider taking real estate as collateral for appeal bonds.

To read more about the specific details of each form of collateral, visit our Collateral Options Page

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