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Home>Levelset Community>Legal Help>The owner is talking about buying a bond to put on the property. How will that effect me if I later put the mechanics lien on and someone buys the property?

The owner is talking about buying a bond to put on the property. How will that effect me if I later put the mechanics lien on and someone buys the property?

CaliforniaBond Claims

we are owed like $65,000 on a project which is now for sale. We have not yet filed a mechanics lien.

1 reply

Oct 1, 2018
As you know, if you're contemplating filing a lien, mechanics liens are powerful tools to secure payment. Much of that power is derived from the fact that a mechanics lien encumbers the improved property itself. When a lien encumbers the property, it makes it difficult to sell or refinance the property.

Because of this, property owners understandably want to avoid liens. In some cases, this can be done by providing a payment bond to "substitute" for the property itself. When this is allowed, and happens, the property may be kept free of liens by erecting claims to be made against the pile of money represented by the payment bond, rather than against the property itself. In some cases, this can actually make it easier to recover a claim, as payment doesn't require a foreclosure on the property in order to free up the funds.

Making a bond claim, in situations in which a bond is not statutorily required, is generally controlled by the terms of the bond itself. There are likely certain timing and notice requirements that must be met, as well as some requirement to support the claim being made.

Additionally, just because a property is listed for sale doesn't mean that a mechanics lien cannot be filed against it. If a lien is appropriate and is filed prior to the property being sold (and prior to a bond being obtained), the lien may be effective to result in fairly quick payment, since the sale may be held up if the lien is not resolved.
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