I purchased a building that had a $600k mechanics lien filed on it. The contractor filed it to protect their interest and is currently in the process of reaching a settlement on the final payout with the insurance company that is responsible for paying. I purchased it to subject to the lien. I now have a refi that is helf up until this is settled. My title company told me to look into having the lien bonded off. I can't seem to find out how to do this or who do have do it?
I would honestly look into other ways to get your building refinanced. The process for bonding off a mechanic's lien in Ohio is needlessly tedious and convoluted. Since the legislature did not put a specific mechanism in the statute, the owner of property must follow a host of steps to have a bond approved and substituted for a mechanic's lien.
First, the owner must procure a bond from a surety (if the lien is in the amount of $600,000, then the bond would need to be in the amount of $900,000 or 150% of the lien amount). The surety typically demands an upfront payment of 1% or more of the bond amount as the premium for the bond. This could be $9,000 or more and is not refundable. Most larger insurance companies will write lien bonds, assuming the property owner is sufficiently credit-worthy or has sufficient collateral.
The next step in the process is to get a court to "approve" the bond and "substitute" the bond in place of the lien. Since there is no process for this, the only real way to get a court's approval is to file a complaint in the court where the property is located (or other courts but I find the same county to be most appropriate) and basically request that the court approve the bond. Once the application is filed with the court, you are at the mercy of the court. Some courts deal with these applications much quicker than others. Even still your best outcome is probably 2-4 weeks, and your worst outcome is many months to a year before you get approval.
The approval process in court involves setting a hearing to determine the "sufficiency" of the bond. Assuming the bond is underwritten by a notable surety (Zurich, Chubb, etc.) then the hearing should be quick and approval granted shortly afterward.
After the approval, the lien is technically released from the property and substituted with the bond, but due to the awkward way the statute is written in Ohio, it sometimes takes many more weeks or months to convince a title company that the lien is actually removed from the property, which could add even more length to your timeline.
In addition to the lengthy timeframe, by posting the bond you would be holding yourself liable for the lien. Since you don't know anything about the lien or the validity of the underlying contract and work on your property, I would not bond off the lien for that simple reason. If the lien is to be bonded off, it should be bonded off by the insurance company that is negotiating with the contractor.
You may still be able to get a refinance through some creativity on the part of the title company. Perhaps they can lock you in for the new rate for a period of time with a down payment of some sort, and then you sign the deal once the lien is removed? Maybe the insurance company can bond off the lien? Maybe the insurance company can sign a promissory note in favor of the lienholder, and get the lienholder to release the lien? Maybe the title company can put pressure on the insurance company to settle?
I think these options may suit your needs better than bonding off the mechanic's lien.