Ask the Legal Professionals, Phoenix Business Journal, May, 2012

Published on in News Articles

Q: I’ve been told that if mechanics’ liens are recorded against my property I can “bond around” those liens. What exactly does that mean?

A: Pursuant to A.R.S. §33-1004, as the owner you can record a lien discharge bond with the County Recorder. The bond must be in an amount equal to one and one-half times the principal amount of the lien and is conditioned for payment of the judgment that would have been rendered against the real property. For the owner, recordation of the bond removes the lien as an encumbrance against the property. For the lien claimant, the bond substitutes for the property as the target of the lien and lien priority and the amount of equity in the property is no longer an issue. The parties still litigate the validity of the lien and any recovery is from the principal and surety on the bond rather than the real property.

B&C: Ask the Legal Professionals, Phoenix Business Journal, May, 2012