Every timely mechanic's lien creates a security interest in the project owner's land and building which is an encumbrance on the owner's legal title, making construction financing and ultimate sale difficult. (See Construction Law Comments - Fall 1993). But the mechanic's lien statute enables an owner to protect its property from mechanic's liens through the use of lien bonds which become substitute security for the owner's property. When a lien bond is filed, the lien claimant must pursue recovery against the bond. A lien bond protects the owner by eliminating the legal encumbrance on his title. The party filing the mechanic's lien is not harmed because his payments are secured by the lien bond surety.
The statute provides for two different types of lien bonds. The first type, (C. 254, §12), applies to all mechanic's liens filed on a project. To be effective, that bond must be in the statutory form, must state a penal sum equal to the full general contract price, and should be filed before work begins. When filed in the Registry of Deeds, this type of lien bond prevents any mechanic's lien attaching to the owner's property. Every mechanic's lien filed after this lien bond is in place is treated as a claim against the bond rather than a claim against the owner's property. The only exception is where the owner requires the contractor to file such a bond rather than filing it himself. Since a contractor may not recover against its own bond, the contractor alone retains the right to assert a mechanic's lien against the owner's property. The second type of lien bond, (C. 254, §14), is used to dissolve a specific lien already on file. There is no statutory form but the bond must name the mechanic's lien claimant and state a penal sum equal to the amount of the lien. When that bond is recorded in the Registry and notice is given, the claimant's mechanic's lien against the owner's property is automatically dissolved, and recovery must be on the lien bond.
Statutory requirements for recovery against each type of lien bond differ. It is therefore essential to determine the type of any lien bond recorded. To recover against a §12 statutory lien bond applicable to all mechanic's liens, a claimant need only file a timely Notice of Contract in the Registry and sue on the bond within 90 days of completing work. To recover against a §14 lien bond applicable to a single lien, the claimant must meet all filing requirements for establishing and preserving a lien imposed by the statute as if there were no bond, and sue on that bond within 90 days after the bond was recorded.
A valid lien bond benefits mechanic's lien claimants because recovery against a bond surety is less cumbersome than recovery against the project owner's real estate.
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