Understanding the Basics of Filing a Bond to Discharge a Mechanic’s Lien

When a mechanic’s lien is filed against a property, it can create significant financial and legal challenges. The lien can block construction financing, halt ongoing projects, and create disputes among stakeholders. Fortunately, property owners and contractors have the option to file a bond to discharge the lien, a solution that can quickly remove these obstacles.

What is a Mechanic’s Lien?

A Mechanic’s Lien is a legal claim against a property for unpaid work or materials used in construction or improvement of the property. Filing a Mechanics Lien (or construction lien claim) is a way for a contractor, subcontractor, or supplier to secure payment for services and materials provided to a construction project. If the owner of the property or the general contractor fails to pay, the lien provides a means to recover the amount owed through a court action or the sale of the property. Filing a mechanic’s lien can also serve as a warning to potential buyers of the property that there is a claim against it. Mechanic’s Liens provide protection to contractors, vendors, material suppliers and professional services in the construction industry. A Lien is a legal tool to protect yourself, for non-payment.

 

What is a Mechanic’s Lien Discharge Bond?

Under New York Lien Law § 19(4), a lien can be discharged by filing a surety bond. This process temporarily removes the mechanic’s lien from the property’s title. The bond guarantees the lienor any payment still due to them, with interest, should they win the case in court. The bond amount typically deposits 110% of the lien’s value with the court.

 

Who Would File a Bond?

A bond to discharge a mechanic’s lien is typically filed by either the property owner or the general contractor. The bond acts as a substitute for the lien, providing security to the lienholder while allowing the property to be free of the encumbrance. This is particularly useful when there is a dispute over payment but the property owner or contractor wants to keep the project moving forward.

 

Why Is a Bond Helpful?

Filing a bond is an effective way to minimize the impact of a mechanic’s lien. It allows the property owner or contractor to remove the lien from the public records, which can be critical for obtaining construction financing or selling the property. The bond assures the lienholder that their claim is still secure, even though the lien itself has been discharged from the property.

 

Impact on the Lien

Once the bond is filed, the mechanic’s lien is transferred from the property to the bond. This means that the lienholder’s right to payment is preserved, but the lien no longer clouds the title of the property. This can be a game-changer for projects that are stuck due to a lien, as it allows for the continuation of construction without the burden of an unresolved lien.

 

Can Financial Holds Be Released?

Yes, once the bond is filed and the lien is discharged, any financial holds related to the lien can be released. This includes construction financing and other funds that may have been on hold pending resolution of the lien. By filing the bond, you can ensure that your project stays on track and that your financial obligations are met.

At New York Bond Filing Agent, we specialize in filing bonds to discharge mechanic’s liens quickly and efficiently. As the only company offering this service, we provide a hassle-free alternative to hiring an attorney. Contact us today to learn more about how we can help you resolve your lien issues.

 

Contact Information: New York Bond Filing Agent
​212-500-1229 x 1001 (office)
www.NewYorkBondFiling.com
Info@NewYorkBondFiling.com
50 East 42nd Street, New York, NY 10017