Release of Contractor’s Lien Bond

What is a Contractor’s Lien?

It is a claim placed on a property made by the contractors or subcontractors because the property owner failed to pay them for the work they have performed on the property. A contractor’s lien is also known as a “mechanic’s lien” or “construction lien.”

Aside from the contractor and subcontractor, a construction supplier may also file a lien due to unpaid invoices.Release of Contractor’s Lien Bond

Liens are a way to ensure that the property owner will pay the contractors and subcontractors the amount due. When a lien is placed on a property, the property owner cannot sell, refinance, or transfer the property’s title. If the property owner does any of the aforementioned actions, whoever has filed for the lien can sue the property owner.

The contractors and subcontractors are required to inform the property owner before filing a lien; however, some states allow the filing of lien without the knowledge of the property owner.

In addition, some states allow architects and engineers of the construction project to file for a lien as well.


What is a Lien Release?

If the property owner has paid whoever filed the lien all the monies due, a lien release will be issued. The lien release is a statement that shows that the contractor, subcontractor, or supplier has released its stop notice, payment bond, and lien rights for the work performed on the property or the materials supplied.

There are two types of lien releases: Unconditional and Conditional.

  • Unconditional Lien Release – a lien release that shows that the contractor, subcontractor, or supplier has been fully paid thereby unconditionally releasing their rights on the property or the construction project.
  • Conditional Lien Release – an agreement made with the contractor, subcontractor, or supplier before paying them. It shows that the property owner will pay them until the debt is fully paid.


What is the Release of Contractor’s Lien Bond?

If the property owner wishes to sell, refinance, or transfer the property but cannot do so because the lien has not been released yet, the said property owner can get a Release of Contractor’s Lien Bond.

It is a financial guarantee provided by the Surety to discharge the contractor’s lien placed on the property. This type of surety bond is a legal promise that if the court enforces the payment of a claim, the claimant will be fully paid.

There are 3 parties to this bond:

  • Principal – the property owner who failed to pay the amount due to the claimant
  • Obligee – the claimant (e.g. contractor, subcontractor, or supplier)
  • Surety – the surety company that will guarantee the fulfillment of obligations by the Principal. The Surety will also ensure that the claimant will be paid if the Principal defaults on the bonded obligations.


Is collateral required for the Release of Contractor’s Lien Bond?

Yes. The degree of risk for this type of surety bond is high. The surety credit that will be extended to the Principal must be supported by collateral that is sufficient to the amount in case of a default.

We accept various types of collateral—some of which are as follows:

  • Fixed Assets
  • Certificates of Deposits
  • Marketable Securities
  • Irrevocable Letters of Credit

Please see our complete list of acceptable collateral here. If you have further questions about collateral or if you want to discuss your situation further please give us a call at 800-333-7800.

How much does a Release of Contractor’s Lien Bond cost?

The bond premium that the Principal must pay the Surety is a small percentage of the bond amount. The bond premium will depend on several factors such as the Principal’s financial capacity, credit score, and business history.

A Principal that has a high credit score may be able to pay as little as 1% of the bond amount. Another example is if the Principal posts large collateral. This may lower the bond premium as well.

How to apply for a Release of Contractor’s Lien Bond?

Here’s a step-by-step bonding process that we have made easier so that you can get your bond in no time:


You can apply for this bond using our online application form.


Next, you will be asked to submit a few important information that our underwriter will need to assess the following:

  • Your job or business history
  • Your credit score
  • Your financial strength
  • Copy of the contractor’s lien – you can upload this using our online application page
  • Collateral provided

To avoid any delays, make sure that you have gathered the right information needed prior to submitting it.

Once the underwriting process is done, we will immediately issue your bond and send it to you right away!

Apply for your Release of Contractor’s Lien Bond HERE!
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