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Should I sign a bond release before getting paid?

We completed a job, Jollibee, recently and we did file a mechanics lien. The contractor, JG Construction, still owes us $183,000. Jollibee is asking us to complete the bond release. But we're afraid if we do, we won't get paid in full. The other option we're considering is to file an intent to foreclose on the property. I think we have until the end of March to file. I can also send you the documents that Jollibee sent us. I don't see an option to upload a document though. I can be reached at 619-871-2305 or at mmorgan@magnumsp.com. Thank you, Mike Morgan Magnum Sealing & Paving.

1 reply

Mar 12, 2021

I think your wariness is warranted. Generally, it's not a good idea to release or waive a claim before payment is made. All too often, construction businesses release their claims upon the promise of payment, only to remain unpaid. Levelset discussed a situation like that here: Subcontractor Trusted Owner’s Promise To Pay – And Lost Lien Rights.That being said, there are some other options to secure payment if the other side is really intent on getting the claim released. More on that here: Creative Options To Secure A Party’s Promise To Pay.

As you mention above, threatening to foreclose a lien can be an effective way to force payment after a lien has been filed. For further discussion on that topic, here's a helpful article: Construction Payment: What Is a Notice of Intent to Foreclose? Here's another article that might be useful, too: The 4 Steps to Take After Filing a Mechanics Lien.

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