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Bond Of Lien , or commonly know as "to bond around a lien on real property" can be tricky and very costly for your company.

 

A BOND OF LIEN is considered a "claim" in progress. Why? Because the bond replaces the lien claim and automatically gives the complainant access to the bonded amount as guaranteed.

 

To issue Bond of Lien, a Surety requires 100% of the bond amount in the form of collateral, which you must post either as cash, or as an Irrevocable Letter of Credit from an Approved Bank, as well as, charge you an annual Term Premium.

 

Additionally, The surety requires you to indemnify ( reimburse the surety for all costs related to defending and paying the claim, if any) while your collateral, under a "Collateral Agreement" is retained, in some cases, up to 2 years or until a court release of the bond is received.

 

For example , Estimated bond cost would be $50,000.00 of posted Collateral plus premium of 1.5 % or = $750.00 annually until claim resolved.

 

Once your bond is filed with the County Court to release the lien, the complainants or plaintiffs have the right to make a legal claim against the surety bond amount.

 

This is "money in the bank" for the complainants or, most often, their attorney, to collect fees, interest, and the like , while requiring you to hire an attorney to defend your company , as well as the surety. This means petitions, interrogatories, discovery and mediation expenses, as they drag out the settlement.

 

In the end, it is more cost-effective to agree to pay outstanding liens for release and pursue reimbursement from the offending party.

 

This can avoid the "litigation cost" trap on a lien bond.

 

Should you wish to discuss your specific issue further, or wish to obtain a Bond of Lien, please feel free to call.

 


 
 

BondAxis 3718 Mount Vernon, Houston, Tx 77006
phone: (713) 490-5440 • fax: (713) 979-1005 • e-mail: molly@bondaxis.com