Mechanic’s Lien Bond

A mechanic’s lien bond (sometimes called a release of lien bond) is a type of surety bond that allows an individual or company to sell or transfer their property in the event they are being sued to pay for a debt. When a surety company provides a mechanic’s lien bond, they guarantee that payment will be made to resolve the debt if the mechanic’s lien is not successfully contested by the debtor. 

How Mechanic’s Lien Bonds Work

If a contractor allegedly receives no payment for a product or service, he or she can file a mechanic’s lien against the person who owes them the debt. A mechanic’s lien prevents the person who owes the debt from selling or otherwise transferring his or her property. This allows the contractor to sue the debtor without having to worry about the party moving assets out of their possession. 

A mechanic’s lien bond allows the party being sued to sell or transfer their property (almost as if the mechanic’s lien has never been filed). This allows the debtor to contest the mechanic’s lien or the debt while still maintaining control over their assets. The mechanic’s lien bond provides recompense to the party owed the debt should the debtor sell or transfer their property and be unable to pay the debt. 

Note: a mechanic’s lien bond does not remove the mechanic’s lien. Instead it releases the property tied to the mechanic’s lien and ties it to the surety bond instead. 

When to Use a Mechanic’s Lien Bond

Mechanic’s liens and mechanic’s lien bonds are generally used in the construction industry. A common scenario involves a contractor who has performed work on a building and receives no payment. The contractor will then file a mechanic’s lien against the building owner, preventing him or her from selling, altering or transferring the property. If the building owner obtains a mechanic’s lien bond, he or she will be able to sell, transfer or perform additional renovations to the property. 

Obtain a Mechanics Lien Bond in Minnesota

Mechanic’s lien bonds can be used by individuals and businesses in Minnesota. For more information on how to obtain a mechanic’s lien bond, contact The Patrick J. Thomas today.