Saturday, March 26, 2011

Where to foreclose on a bonded mechanic's lien

You filed a mechanic's lien, the owner filed a discharge bond and now you want to foreclose and enforce your lien.  Enforcing the lien against the discharge bond is accomplished the very same way that foreclosing is accomplished when the lien is still attached to the property.  The only difference is that rather than foreclosing against the property you are foreclosing against the discharge bond.  A significant procedural difference is that because the mechanic's lien now no longer attaches to the real property, Civil Practice Law and Rules Section 507 no longer is triggered because you are not filing an action that would involve the disposition of real property.  That means your lien rights are now transitory as they relate to the discharge bond and you may file the action to enforce in any county where venue would otherwise be proper. 

People will often threaten lienors with "bonding their lien."  But its really not a threat at all.  The bond, if anything, is a favor to the lienor.  A bonded lien means you have a nice fund of money now set aside for you to collect once you successfully foreclose upon the lien.  There is no need to go through the hassle of the foreclosure sale of the real property which can be both time consuming and expensive.  There is no need to name all of the other interested parties such as mortgage holders and other lien holders against the property which also could make the action time consuming and expensive.  To top it off, you can now file the action in your home county.  So the next time someone threatens to bond your lien just say Thank You and walk away.

Vincent T. Pallaci is a partner at the New York law firm of Kushnick Pallaci, PLLC where his practice focuses primarily on the area of construction law.  He can be reached at (631) 752-7100 or

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