MECHANICS LIEN RELEASE BONDS: CLEARING YOUR PROPERTY TITLE IN COLORADO

For property owners in Colorado, particularly those involved in real estate and construction, a mechanics lien can be a significant and frustrating obstacle. It can put a halt on property transactions and obscure the title of your home, even if the payment dispute is not directly related to you.

An unresolved mechanics lien can freeze your ability to sell or refinance, tie up your capital, and expose you to prolonged legal battles. GLO offers the essential legal expertise to guide you through the process of "bonding over" a mechanics lien, allowing you to swiftly release your property from the lien and preserve its marketability while addressing the underlying dispute.

What Is a Mechanics Lien Release Bond?

A mechanics lien release bond is a specialized surety bond that removes a lien from a property’s title by substituting a financial guarantee for the lien claimant’s potential recovery. Instead of the property serving as collateral, the bond ensures that if the claimant prevails, they can recover their judgment, interest, and costs from the bond.

Under C.R.S. § 38-22-131, a property owner, or a general contractor on their behalf, can file this bond with the district court in the county where the property is located. The bond must be at least 150% of the lien amount, plus costs. Once approved by a judge, the lien is discharged from the property and replaced by the bond as the claimant’s security.

The Process of "Bonding Over" a Mechanics Lien

Bonding over a lien in Colorado involves several key steps. First, the party must obtain a corporate surety bond or cash deposit meeting the statutory amount. Next, they file a Motion for Approval of Surety Bond to Discharge Mechanic’s Lien in district court, along with the bond, a proposed Certificate of Release, and a proposed court order. The court proceeding is typically ex parte, meaning the lien claimant doesn’t participate. Upon judicial approval, the district clerk issues a Certificate of Release, which must be recorded with the County Clerk and Recorder where the lien was filed. Once recorded, the lien and any lis pendens are removed from title, and the bond replaces the property as collateral.

What Happens When a Lien Is "Bonded Over"?

Once a lien is bonded over, the property is immediately and permanently released, clearing the title and removing any associated lis pendens. This allows for sales, refinancing, or other transactions to proceed unencumbered.

The lien claimant must now pursue recovery against the bond, rather than the property itself. Under C.R.S. § 38-22-133, a lawsuit must be filed against the bond to recover the claim. The dispute remains active, but title is no longer at risk. Importantly, the statute of limitations for enforcing the lien still applies, even though the asset has changed from real property to a bond.

Key Benefits for Property Owners

Bonding over a lien clears the title, enabling timely transactions such as sales or refinancing. By substituting a financial instrument for the lien, the owner retains flexibility and control over the property.

It also helps reduce legal costs and liability exposure. If a dispute is between a general contractor and subcontractor, the owner may be pulled into litigation. Bonding the lien removes the property from the lawsuit, often making the owner a non-party and avoiding unnecessary legal fees and delays. Ultimately, bonding over a lien transforms a property encumbrance into a financial dispute, streamlining resolution and preserving the owner’s peace of mind.

How GLO Can Help

GLO provides comprehensive legal assistance to property owners in Colorado facing mechanics liens. We guide clients through the entire process of "bonding over" a mechanics lien, ensuring swift and compliant removal of the encumbrance from your property title. Our services include assisting in obtaining the necessary surety bond, preparing and filing all required motions and documentation with the district court, and ensuring the proper recording of the Certificate of Release. We also advise on the implications of bonding over the lien, helping you understand how it shifts the claim to the bond and potentially alleviates your direct involvement in subsequent disputes. With GLO's expertise, you can protect your property's marketability and navigate lien challenges effectively.

Contact GLO today to determine whether bonding over a mechanics lien is the right strategy to protect your property and move your project forward without delay.