Surety Bond Encyclopedia

Discharge / Release Mechanics Lien Bond - Statewide in All States

Brief Summary

A lien release bond moves a mechanics lien off the title and onto the bond, so a sale, refinance or construction draw can close while the payment dispute is settled separately. The part people get wrong is the amount. It is never simply the lien amount. Each state sets a multiple of the claim, and the bond has to hit that figure exactly or the clerk or court will not discharge the lien.

A discharge or release of mechanics lien bond substitutes a surety bond for the real property as security for a contractor, subcontractor or supplier lien claim. The owner, a contractor or another party with an interest in the property posts it. The amount is fixed by state statute as a multiple of the lien, for example 110 percent in New York, 125 percent in North Carolina, and double the lien in Texas unless the liens total more than $40,000.

We can help with all All States bonds!

How to Apply for a Discharge / Release Mechanics Lien Bond:

Get a copy of the recorded claim of lien showing the claimant, the amount and the recording information.
Look up your state's discharge formula and calculate the required bond amount from the lien amount.
Have the legal description of the property and the principal's legal name ready.
Complete the bond application and provide the contract and a summary of the dispute for underwriting.
Pay the premium and any collateral the surety requires, then receive the executed bond.
File or record the bond with the office your statute names, such as the county clerk or clerk of court, or submit it for court approval where required.

Detailed Information About the All States Discharge / Release Mechanics Lien Bond:

The amount depends on your state

There is no national bond amount. Each state's lien statute sets a formula, and the bond must meet it. A few examples, all taken from the statutes linked on this page:

**Texas.** Property Code 53.172 requires double the amount of the liens unless the total claimed exceeds $40,000. Above that, the bond must be the greater of 1-1/2 times the liens or the sum of $40,000 and the liens. The bond is filed with the county clerk under section 53.171 and is payable to the parties claiming the liens.

**Florida.** Statutes 713.24 lets any person with an interest in the property or the contract transfer the lien to a bond or cash deposit with the clerk. The amount is the lien claim, plus interest at the legal rate for 3 years, plus $5,000 or 25 percent of the amount demanded in the claim of lien, whichever is greater.

**North Carolina.** G.S. 44A-16(a)(6) discharges the lien when a corporate surety bond equal to one and one-fourth times the claim is deposited with the clerk of superior court.

**New York.** Lien Law 19(4) calls for a bond equal to 110 percent of the lien, approved by the court, which then issues an order discharging the lien.

**Ohio.** Revised Code 1311.11 sets the bond at double the claim, or one and one-half times the claim when it exceeds five thousand dollars, with approval through the court of common pleas.

If your property is in another state, read that state's lien statute before the bond is issued. The multiple, the interest add on, the filing office and the approval step all vary.

Who posts the bond and who it protects

The principal is whoever wants the lien off the property: usually the owner, the general contractor, or a lender or buyer with an interest in the real estate. The protected party is the lien claimant. The bond promises that if the claimant proves a valid lien, the claimant will be paid from the bond up to its amount. Posting the bond does not decide the dispute. It only changes what secures it.

How the premium is set

The surety looks at the bond amount, the financial strength and credit of the principal, and the facts behind the lien. The underwriter will want the recorded lien, the contract, and an explanation of why the claim is disputed. Because the surety may have to pay the claimant, it can ask for collateral when the claim looks strong or the principal's financials are thin.

Eligibility and Requirements for a All States Discharge / Release Mechanics Lien Bond:

Bond amount set by the state's statutory multiple of the lien, not the lien amount alone.
Accurate description of the property and each lien the bond covers.
The lien claimant named as the protected party or obligee, as the statute directs.
A corporate surety authorized in the state where the property is located, as Texas and North Carolina require.
Court or clerk approval in states that require it before the lien is discharged.

All States Discharge / Release Mechanics Lien Bond FAQs:

How much does the bond need to be?

It depends on the state. Texas uses double the lien unless the liens exceed $40,000. North Carolina uses one and one-fourth times the claim. New York uses 110 percent. Florida adds 3 years of interest and the greater of $5,000 or 25 percent of the claim. Check your state's statute before ordering.

Does bonding off the lien mean I have won the dispute?

No. The bond only replaces the property as security. The claimant can still pursue the claim, now against the bond instead of the real estate.

Who can post a lien release bond?

The statutes generally allow the owner and others with an interest in the property or the contract. Florida extends it to any person having an interest in the real property or the contract under which the lien is claimed. Texas allows any person to file the bond.

Where is the bond filed?

It varies. Texas files with the county clerk. Florida and North Carolina deposit with the clerk of court. New York and Ohio require court approval. Confirm the filing office and any required form with the clerk in the county where the property sits.