Bond to Release a Mechanic's Lien

Private Property

The owner or claimant of property against which a lien has been asserted under KRS 376.010 may at any time before a judgment has been rendered enforcing the lien, execute before the County Clerk where the lien was filed, a bond for double the amount of the lien claimed with good sureties to be approved by the clerk.  Conditioned upon the obligors satisfying any judgment that may be rendered in favor of the person asserting the lien.  The clerk shall preserve the bond and upon its execution, the lien shall be discharged.

It is recommended that the clerk only accept an insurance bond issued by an approved company in good standing with the Ky. Dept. of Insurance.  Each clerk should have a list of these companies.  KRS 304-21.201 (2)(3) states the county clerks will be provided a list by March 1 of each year.  These companies can also be verified by contacting the Ky. Dept. of Insurance at 502-564-3630.  Their address is PO Box 517 Frankfort KY 40602-0517.  An example of the insurance bond is on the next page.

The surety bond is recorded along with the release document. 

The document requires:
•    The name of the party asserting the lien
•    The name of the party the lien is against
•    The surety bond
•    There must be a place on the document for the clerk’s approval of the surety.
•    The bond must be double the amount of the lien.
•    A Preparation Statement KRS 382.335
•    Reference where the lien is recorded (the book and page)
•    Signature required, and must be notarized.
•    The clerk shall request a return mail address (KRS 382.240)

 

PUBLIC PROPERTY

Prior to judgment, a bond to release a lien may be executed before the county clerk in the county in which the lien was filed.  The bond must be double the amount of the lien claimed.

Per statute, the clerk shall approve the bond only if the bond is secured by:
1.  Cash or
2.  A letter of credit from a bank or
3.  Surety by a licensed insurer

SURETY BY A LICENSED INSURER - PREFERRED 
When accepting a surety bond by an insurance company, the clerk must make certain the insurance company is in good standing with the Kentucky Department of Insurance.  Each clerk should have a list of such insurance companies.  KRS 304-21.201 (2)(3) states that the county clerks will be provided this list by March 1 of each year.  These companies can also be verified by contacting the Kentucky Department of Insurance at 502-564-3630.  Their address is PO Box 517 Frankfort KY  40602-0517.

The surety bond is recorded along with the release document

A LETTER OF CREDIT FROM A BANK - PREFERRED
A letter of credit from a bank must be an original, on bank stationery and must be signed by an officer of the bank.  The letter of credit must state that it is irrevocable.  Even though this is not in the statute, a revocable letter of credit would not satisfy the term bond. The letter of credit must be maintained by the clerk’s office in a secure location as you would any other secured document (such as a will), or in a lock box or safety deposit box.  It is important to treat a letter of credit as if it was cash.  It is the clerk’s backing for the bond.  A photocopy of the letter of credit is recorded along with the release document.

The county clerk would return the letter of credit after receiving a properly executed release of the mechanics lien by the legal holder of the lien or upon a court order.

The document requires:

•    The name of the party asserting the lien
•    The name of the party the lien is against
•    The surety bond must be attached to the release.
•    There must be a place on the document for the clerk’s approval of the surety.
•    The bond must be double the amount of the lien.
•    A Preparation Statement (KRS 382.335)
•    Reference where the lien is recorded (the book and page)
•    Signature required and must be notarized
•    Clerk shall request a return mail address (KRS 382.240)

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