Purpose of Lien Release Bond
Property owner’s can purchase a lien release bond to discharge a lien they believe was wrongfully placed on their property. Property cannot be sold or refinanced if the lien has not been released or if a lien release bond was purchased. The bond allows the property owner to sell their property, however also ensures that in the event a property is sold, the contractor whom is owed money has the mechanism to get paid. The bond release must be equal to or greater than the amount of the contractor lien.
The landowner can discharge the supposed debt by filing a lien release bond with the county recorder’s office. This bond is required for labor and material disputes of general contractors and other workers of the service industry. The bond protects the interests of both the landowner (by releasing the lien) and the supposed injured claimant (by guaranteeing payment to the servicer if the claim is deemed valid). This means the lien claimant will receive a letter indicating that although the lien is removed, personal interest on the real property does not terminate unless found that the claim was invalid.
To file a lien release bond the following must be submitted:
Application for lien release bond
Personal financial statement
Explanation of the issue in question, including the disputed property and payments requested
Copy of court order
