Insurance & LiensQuestion 681 of 690
An owner wants to remove a $60,000 mechanics' lien recorded against the property so the property can be sold or refinanced. Under Civil Code §8424, the owner may obtain a release of the lien by recording a lien release bond in the amount of:
a.125% of the claim of lien ($75,000 here), issued by an admitted surety insurer, which substitutes the bond for the lien against the real property; the claimant must then pursue the bond rather than the land
b.100% of the lien amount, plus a $500 filing fee with the county recorder
c.The full amount in cash deposited with the county recorder; surety bonds are not allowed
d.50% of the lien, because the lien is only presumptively valid
Explanation
Civil Code §8424 allows an owner (or other interested party) to record a lien release bond in the amount of 125% of the claim of lien, issued by an admitted surety insurer. Upon recording, the bond replaces the real property as the security for the lien, and the lien is released. The claimant then must pursue the bond (and surety) within the §8460 90-day enforcement window — but the surety also has standard defenses. The 100%, all-cash, and 50% options misstate the rule. The 25% buffer covers attorneys' fees and interest. Lien release bonds are routinely used during real-estate closings to clear title without paying disputed amounts.
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