Contractors and owners may use their ability to bond off liens as a threat. However, as we’ve discussed before, a claimant should not be afraid of their lien being bonded off. We could write a whole post on that subject (actually, we have), but here’ the short of it: when a mechanics lien is properly bonded off, the claim lives on. Plus, some rigid procedural and form requirements for liens might be set aside. All in all, a bond claim may actually be better than a lien claim (we’ve got a post for that, too). Following a recent case that went all the way to the Supreme Court of Kansas, we can safely say that under Kansas lien law, having a lien bonded off is good news.
Kansas Lien Law
Under Kansas lien law, a contractor or owner may bond off lien claims. Once a bond is posted, lien claims are discharged. As we mentioned in this post last week, there are extra requirements for claimants when a lien is bonded off. In Kansas, suit must be brought to reignite the claim against the newly posted bond.
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Bonded Off Liens Are Good News in Kansas
It is incredibly important to bring suit against a payment bond once a lien claim is discharged. But once that suit is filed, at least in Kansas, a claimant can relax…well, at least a little.
In a recent case, Wagner v. Dynamic Drywall, Wagner, a drywall supplier, had its lien bonded off by the general contractor. Wagner filed suit against the bond shortly after. In opposition to the bond claim, the contractor argued that Wagner could not recover because its lien claim contained errors that would have prevented its enforcement. Wagner argued that any errors in its lien claim were irrelevant for the purposes of enforcing its (separate) bond claim.
The court sided with Wagner. To quote the court, “After the bond is filed, the claim, not the statutory lien, is the focus…” The distinction is more than just semantics. Regardless of whether Wagner had a valid lien claim, Wagner could file a bond claim. So, any error in the lien claim was irrelevant once the bond was present (even though that bond was only instituted to discharge the lien). Here’s another quote from the court:
Payment of Wagner’s claim against the bond, by its own terms, depends not on satisfaction of the perfection requirements under the lien statute, but on the ability to prove the elements of the underlying interest — the claim.
This is great news for lien claimants in Kansas. Small errors regularly destroy lien claims, and that’s exactly what would’ve happened had this lien not been bonded off. When a lien is bonded off, it can be frightening for a claimant. When attached, the security that liens provide is unparalleled. It’s good to know that owners and contractors won’t be able to dodge the force of lien claims while also relying on their strict requirements to escape liability.