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Should I file a bond claim?

Help! We rarely have to file a lien on a project. Often times the threat is enough to shake out payment. Unfortunately, that was not the case on this project and we ended up filing a mechanics lien. I received a response from the property owner requesting the lien be cancelled in exchange for a surety bond. I'm not sure how to proceed.

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Jan 20, 2020

It's relatively common for a property owner to bond off a mechanics lien that's filed against their property. But, to be sure - a mechanics lien being bonded off doesn't just mean the claim will disappear or that recovery won't be made. Rather, it changes the recovery process a little.

What to do when your New York mechanics lien is bonded off

When a lien is bonded off, that simply removes the property title from the equation - and, a claimant is entitled to enforce their claim (via lawsuit) against the bond just as they would against the property. Levelset discusses that here: Don’t Be Afraid Of Threats To Bond Off Your Mechanics Lien: Explaining Mechanics Lien Bonds. Because the payment claim remains, not all that much changes - at least in the short term - when a lien is bonded off. A claimant is still able to negotiate payment, and they can still leverage their ability to file an enforcement suit in order to force payment. While a bond ensures that funds will be present if the claimant is successful in making their claim, an owner isn't off the hook. They'll ultimately have to pay that surety back if worse comes to worst - so, they should still have a strong interest in resolving the matter before a lawsuit becomes necessary. As a result, negotiating payment should be possible, and the threat to bring suit still holds a lot of weight. It's possible, though, that a bonded off lien will have to be enforced via suit - just like some mechanics liens must be enforced. Once a New York mechanics lien is bonded off, the lien claimant will have 1 year from the completion of the project to file suit against the bond. Or, if the project is abandoned, then the claimant will actually have 2 years from the last furnishing date of the project. But, to be safe, it's usually a good idea to be conservative when complying with deadlines. Considering that a lien enforcement suit will likely require a New York construction lawyer, it's a good idea to consult with one well before the enforcement deadline to aid in recovery and help to create a plan of attack.

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