Construction Law

Should You Bond Off a Lien Claim on Your Project? Part 1

The mechanics lien is one of the best tools at a contractor’s disposal for dealing with an owner who refuses to pay, but there’s more than one way to obtain the compensation you are due. Most contractors have a mile-long list of things to deal with on any given day. From overseeing subcontractors to communicating with materials suppliers and maintaining project timelines to meet performance bond requirements, the last thing any contractor wants to deal with is nonpayment. Unfortunately, nonpayment is a grim reality in the construction industry that often requires experienced legal help to sort out.

Owners can be crafty, and when they decide that they don’t want to compensate you for your services, they’ll utilize an array of tactics to leave you high and dry. They might even claim that you breached the contract and come after your license. Partner with a Nashville license defense attorney from Cotney Construction Law for assistance with everything from negotiating contracts to defending your license or even filing a mechanics lien. Our attorneys can even help you “bond off” a lien claim to help preserve your relationship with an owner. In this two-part series, a Nashville license defense attorney will discuss whether or not bonding off a lien claim is right for you.

How It Works

You’re probably familiar with mechanics liens and how they help contractors get paid for the work they’ve completed, but, more often than not, contractors aren’t privy to the concept of “bonding off” a mechanics lien. When a contractor bonds off a mechanics lien, the property they intend to file a lien against is replaced with a surety bond. The mechanics lien is then substituted with a mechanics lien bond, and in turn, the claimant pursues a payment bond against the surety bond.

Who Does This Benefit?

Typically, we don’t equate a mechanics lien with making an owner happy, but when you bond off such a lien both parties can potentially benefit. As we mentioned in our article, What is “Bonding Off” a Mechanics Lien?, bonding off a lien can help reduce the amount of time it takes to enforce the claim and help both parties move on from the dispute. More importantly, bonding off a mechanics lien can help keep the wheels turning on a project since the owner’s title won’t be burdened by a pending mechanics lien claim. While the actual results of bonding off will vary from case to case, consulting a Nashville license defense lawyer to help guide you through this process can help you make the most of your claim while avoiding a potential breach of contract or other actions that could mar your license or reputation.

Now that you have a better understanding of what bonding off a lien claim entails, we can answer the titular question: should you bond off a lien claim on your project? You can find the answer to this question in part two.

If you would like to speak with a Nashville license defense lawyer, please contact us today.

 

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.