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What is a "Notice of Filing Bond To Indemnify Lien" ?

TexasBonding Off LienMechanics Lien

I had Levelset file a mechanical lien for my company, document 2634760. Yesterday I received a certified mail with the a notice stating the Mechanical had filed a "Notice of Filing Bond To Indemnify Lien....could you explain what this is and what I need to do next?

1 reply

Oct 25, 2019
Based on the information above, it sounds like your lien may have been bonded off. When someone bonds off a mechanics lien that's been filed, they must send notice of that bond. When a mechanics lien is filed against a Texas property, an owner, contractor, or other interested party is entitled to bond off the filed lien claim. Essentially, this means that a surety bond (which is more or less like an insurance policy) will replace the property in the lien claim. So, when a lien is bonded off, the claim doesn't disappear - but it does change how recovery will be made a bit. More on mechanics lien bonds here: Primer on Mechanics Lien Bonds and Bonding a Mechanics Lien.

What happens to a claimant when their lien is bonded off?

When someone substitutes a bond for a filed mechanics lien, the county clerk must send notice that the bond has been filed, pursuant to Texas Property Code § 53-173. And, a copy of the bond must be attached with that notice in order to allow a claimant to proceed with their claim against the bond. The process of recovering on a claim via the bond isn't all that different than the process for recovering under a lien claim. Just like with a lien claim, if a claimant remains unpaid, they'll need to enforce their claim via legal action. And, an action on the bond must be filed within one year from the date when the notice of the bonded off lien is given or before the claimant would've needed to enforce their lien claim.

Bottom line

Ultimately, recovery doesn't change all that much when a lien is bonded off. A mechanics lien that's been filed may need to be enforced (via lawsuit) in order to force payment. And, when a lien is bonded off, that enforcement action simply comes against the bond rather than against the project property. And, just like after a lien is filed, a claimant whose lien has been bonded off will have some time to negotiate and try and force payment before a lawsuit ultimately becomes necessary. With that in mind, the following article should still be pretty applicable: The 4 Steps to Take After Filing a Mechanics Lien.
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