Category Archives: Mechanic Lien

Mechanic’s Lien Bond aka Bond Around a Lien

Mechanic’s Lien Bond aka Bond Around a Lien, lien release bond, and bonding off a lien.

What is a Mechanic’s Lien?

Mechanic’s liens in their modern form were first conceived by Thomas Jefferson, to encourage construction in the new capital city of Washington. They were established by the Maryland General Assembly, of which the city of Washington was then a part.

However, it is not likely that Jefferson single-handedly dreamed up the idea. 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 called a material man’s lien or supplier’s lien.

What is a Mechanic’s Lien  Release Bond?

If a contractor allegedly 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 property and it 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 has put a mechanic’s lien on your property, you can get a  Mechanic’s Lien Release Bond to remove the lien from your property.

How Does a  Mechanic’s Lien Release Bond Work?

A Mechanic’s Lien Release Bond allows property owners to do with their property what they would if a lien was not present: sell the property, get further remodeling done, etc. In a way, it works as an extension of credit. The bond proves that the property owner has sufficient funds to pay the people involved.

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

The bond is usually issued 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 that tie in with construction. Each of them serves an entirely 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.

It removes the mechanic’s lien from a real property and the mechanic’s lien then attaches to the bond until it is dismissed in some way.

Frequently Asked Questions

Q: Is there only one person responsible?

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

Q: How long does a mechanic’s lien last?

A: Once filed, the 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 one 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 where the mechanic’s lien was filed. That is after you either post the Bond or pay off the lien.

The following information should be included to ensure a quicker response.

1) A completed court bond application – Will provide a basic overall of the bond being requested, as well as information on the principal requesting the bond.

2) Copy of the mechanic’s lien – A copy of the mechanic’s lien can be uploaded with the online application and will provide information to the amount of the lien and parties claiming that payment still due.

Call us at 800.921.1008 to speak with a professional regarding your specific situation or apply

below for a quick turnaround on your Mechanic’s Lien Release Bond.

How can small contractors and their customers benefit from Performance Bonds and Surety Bonds?

keep-your-cool-during-a-home-renovationEver watch HGTV (Home & Garden Television) and witness the horror stories left behind by shady contractors? Things like homeowners without kitchens or baths for months. Police recently arrested 45-year-old Cary Grimm on charges of grand theft for doing just that. Customers say the contractor disappeared without completing the work that was he was contracted for.

One couple said their home remodeling project turned into a nightmare after a few weeks’ delay turned into a half a year battle. The complaints which total nearly $90,000 based on over a dozen complaints by customers that came in after Grimm exhibited at a local home show. How could a surety bond aka performance Bond have helped? These bonds ensure a contractor will perform work required in a contract or winning bid.

Bonds provide small contractors and customers with numerous benefits. The surety bond is a form of protection against contractor default due to faulty workmanship, late delivery or not using specified materials. The surety company helps the contractor avoid costly delays and contract disputes if the sub-contract defaults with their portion of the job by non-performance.  Then the surety company will intervene to fulfill the contractor’s scope of work. When a project is bonded, there’s also an added layer of payment protection for workers and suppliers of the contractor.

Surety bonds help level the playing field, and allow a small contractor to compete in the free market, leading to lucrative contracting opportunities. Consumers and businesses feel more secure when hiring a bonded contractor.  A contractor’s bond and insurance are important forms of protection for anyone who is taking on a construction project.

Furthermore; to avoid a Mechanics Lien, a Payment bond is suggested.  Using this Surety Bond as a tool, gives owners assurance that all suppliers and sub-contractors are paid. Also suggested is an Ancillary bond to guarantee that non-material or performance requirements of a contract will be met. An example would be compliance with special terms, laws or regulations.

Call us to discuss your Performance, Bid, Ancillary and Payment bond requirements.

visit www.bfbond.com call 800-921-1008 or email Jward@bfbond.com

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