An Introduction to Mechanics Lien Bonds
Once completing a project, the contractor and subcontractors are entitled to and expect to receive payment for their work. When not properly compensated, many contractors file a mechanics lien against the property. However, there is not much protection for a prime contractor who is accused of failure to pay. Florida Statutes have attempted to protect them with the Mechanics Lien Bond.
What Is It?
A mechanics lien bond is a surety bond that replaces the value of the property that has previously held the lien. The bond is designed to protect the bond holder from accusations of failure to pay. In terms of a prime contractor filing a bond claim against a property owner, the bond would benefit the property owner. In terms of a subcontractor filing a lien against a prime contractor, the bond would benefit the prime contractor. This can be helpful because it keeps the property under construction from being tied up during the litigation process. However, the mechanics lien bond is not a permanent solution.
How Does it Work?
The mechanics lien bond temporarily releases the lien. Each county has specific regulations, so it is advised to consult with a Bradenton construction attorney to find out the limitation on the length of time for Manatee County courts. During this respite, prime contractors need to take the subcontractor to court to prove they fulfilled the payment listed in the claim or pay the disputed amount to the subcontractor.
How to Get One
In order to get a mechanics lien bond, a prime contractor needs to contact a surety bond company. Many of these have strict requirements for granting a lien bond because of the associated liability. If the prime contractor does not resolve the matter in court, the surety bond company can be left paying the costs.
The costs of a mechanics lien bond can be vast as well. The party filing for a bond must pay certain amounts per Florida Statutes. The party is required to cover the value demanded in the lien, three years of interest and an additional $1,000 or 25% of the value of the property, whichever is greater, to cover any attorney fees and court costs that are accrued during the bond claim process. To get a full understanding of what the process and costs are for transferring a mechanics lien to a mechanics lien bond, contact a Bradenton construction lawyer.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.