bonding off mechanic's lien

3 Replies

A mechanic's lien was placed on a property I am selling. Long story short - crappy work that was never completed, tried to negotiate a settlement with no response from contractor. We both have attorneys, he filed a lien.

I would like to bond the lien off, but am having a lot of trouble getting clarity on how this works. I have talked with my lawyer, other lawyers, and the county clerk. No one seems totally certain how this works. So my question is, if I post a surety bond on the lien will it give me a clear title so I can sell the home? The county clerk says the bond will show up when the title search is done. I would think this means there is not a clear title. So, next question is, how does bonding off the lien really help me? My purpose is to get clear title to sell. The property is in Kentucky. Also, the clerk only accepts surety bonds through an insurance company to bond off the lien. I also have to get an irrevocable line of credit from my bank first, then work through the insurance company.

Has anyone here done this before? Any advice is appreciated.

Originally posted by @David Griffey :

A mechanic's lien was placed on a property I am selling. Long story short - crappy work 

Has anyone here done this before? Any advice is appreciated.

 We've had a similar problem to yours a few years ago.  We established a bond worth 110% of the  mechanics lien amount (it can be in cash or a line of credit).  Our understanding was that process wise the mechanics lien may show up in the title search but the bond trumped the lien thus making the title clear.  

Thanks for the reply. Just wondering how that turned out for you. Did the contractor try to enforce the lien or let it expire?

You don't "bond off" encumbrances. You bond around them. 

This is important to understand, as what you are doing is transferring risk, perceived or not,  so that a title insurer or subsequent buyer or lender is willing to accept condition of title.

Once you research how mechanics liens work by operation of law in your state, you can decide if bonding around is really necessary.

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