- March 14, 2022
- Posted By:Paul Fazzio
- Category:Bonds
A mechanic’s lien is a legal claim made against a property by a contractor or subcontractor who wasn’t paid for the work they performed on it. Unpaid suppliers can make a mechanic’s lien as well. In many cases, homeowners or contractors purchase a lien release bond to release the lien on the property.
Bonding Off a Mechanics Lien
In California, when a homeowner or contractor buys a mechanics lien release bond, the claim attaches to it and the property owner could sell or refinance the property. A lien release bond does not absolve the debt. The process of purchasing a lien release bond from a surety bond company is known as bonding off a mechanics lien.
Once a claimant files a mechanics lien, the property owner or contractor can contact a surety bond company to buy a mechanics lien. After the lien is bonded off, the property cannot be sold or foreclosed to recover the claim amount.
Advantages and Disadvantages of Bonding Off a Mechanics Lien
There are several benefits as well as some disadvantages of bonding off a mechanics lien for all the parties involved in the construction project.
Benefits for Claimants
Bonding off a mechanics lien saves the claimants the hassle of navigating the complex and time-consuming lien foreclosure process. When a lien is bonded off, the surety company steps in to pay the claim, eliminating the need for a lengthy enforcement action.
Advantages for Property Owners and General Contractors
When a mechanics lien is bonded off, the property owner heaves a sigh of relief and can rest assured that the claim will not be made on their property.
A mechanics lien can put the project on hold and put it at risk for foreclosure, frustrating the contractor who may have invested a substantial amount of time and money by the time the claim is made. After a mechanics lien is bonded off, the contractor working on the project has peace of mind knowing the claim won’t disrupt work.
Cons for Claimants
In some cases, bonding off a mechanics lien can do more harm than good. After a mechanics lien is bonded off, the Principal will have to make the effort to familiarize themselves with the next steps they need to take.
Disadvantages for the Buyer
Bonding off a mechanics lien can be a difficult, time-consuming and expensive process. The GC or property owner may have to give collateral of 1.25 times the claim amount for the lien release bond.
In addition, a lien release bond provides temporary relief from the mechanics lien. During this period, the claimant and the bond owner can try to resolve the dispute amicably.
H.M. Vreeland is a renowned surety bond company in California. We help businesses make informed decisions when selecting a surety bond. To talk to one of our pros, call (415) 566-3401.
President, H.M. Vreeland & Son Surety Bonding; Principal / Owner
Paul Fazzio leads H.M. Vreeland & Son, a surety bonding company specializing in probate bonds, court bonds, fiduciary bonds, and related bonding services. Under his leadership, the firm works closely with attorneys, fiduciaries, and probate professionals across California and beyond to facilitate court-required bonds. He also operates Fazzio Fiduciary Accounting LLC, offering accounting, fiduciary oversight, and related services. His expertise spans legal, financial, and bonding domains, making him a key figure in bridging technical financial and legal requirements for clients and institutions.
