Texas Lien Release Bonds
A mechanic’s lien can stall a sale, refinance or construction loan. A Texas lien release bond lets you bond around the lien, removing it from the property while the payment dispute proceeds against the bond instead. Lavon Insurance helps property owners, contractors and developers get the bond in place.
What Is a Lien Release Bond?
The Texas Property Code calls it a bond to indemnify against lien. When a mechanic’s, contractor’s or materialman’s lien is recorded against real property, any person may file a surety bond with the county clerk to replace the property as security for the claim.
Once the bond is filed, notice is served and the bond and notice are recorded, the lien claim is discharged from the property. This is often called bonding around the lien or bonding off a lien.
Property Code §53.171 doesn’t allow bonding around a lien the owner granted in a written contract.
The dispute doesn’t go away
Bonding around a lien doesn’t decide whether the claim is valid. The claimant can still sue on the bond, generally within one year after notice of the bond is served (Property Code §53.175). If the claimant wins, the surety pays and the principal must repay the surety.
Why Would Someone Need a Lien Release Bond?
Selling Property
A recorded mechanic’s lien clouds the title and can hold up a closing.
Refinancing
Lenders usually require recorded liens to be resolved before closing a refinance or new loan.
Disputed Lien
Clear the property now while you contest the validity or amount of the lien.
Keeping a Project Moving
Prevent a lien dispute from delaying construction draws or project financing.
Title Insurance
Once the bond and notice are recorded, purchasers, lenders and title insurers can rely on the record as Texas law provides.
Security for the Claimant
The claimant keeps a path to payment through the bond, so the property is no longer needed as security.
How to Bond Around a Lien in Texas
Texas Property Code §§53.171–53.175 set out the procedure.
Identify the Lien
Gather the recorded lien affidavit, claimant, amount claimed, recording information and property description.
Get the Surety Bond
The bond must meet the §53.172 amount and be issued by a corporate surety authorized in Texas.
File With the County Clerk
File the bond with the county clerk in the county where the property is located.
Notice & Recording
The clerk mails notice and a copy of the bond to the claimant by certified mail, and the bond and notice are recorded.
How Much Does the Lien Release Bond Need to Be?
Under Texas Property Code §53.172, the bond is twice the lien amount. If the liens total more than $40,000, it’s the greater of 1.5 times the liens or the liens plus $40,000.
| Lien Amount | Required Bond | How It’s Calculated |
|---|---|---|
| $20,000 | $40,000 | Twice the lien ($40,000 or less) |
| $50,000 | $90,000 | Lien + $40,000 ($90,000) is greater than 1.5× ($75,000) |
| $80,000 | $120,000 | 1.5× ($120,000) equals lien + $40,000 ($120,000) |
| $100,000 | $150,000 | 1.5× ($150,000) is greater than lien + $40,000 ($140,000) |
What Does a Lien Release Bond Cost?
The premium is based on the required bond amount, not the lien amount. For applicants with good credit, it’s often around 2% of the bond amount for a one-year term, subject to the surety’s minimum premium.
| Lien Amount | Bond Amount | Estimated 1-Year Premium (2%) |
|---|---|---|
| $20,000 | $40,000 | About $800 |
| $50,000 | $90,000 | About $1,800 |
| $100,000 | $150,000 | About $3,000 |
Because a payment dispute already exists, sureties commonly require collateral, sometimes up to the full bond amount, as cash or an irrevocable letter of credit. Collateral is generally returned once the surety is released.
If the bond must stay in force while the dispute continues, a renewal premium is typically due each year until the surety is released from the bond.
Lien Release vs. Lien Release Bond
| Feature | Traditional Lien Release | Lien Release Bond |
|---|---|---|
| Who acts | The lien claimant signs a release | Any person files a surety bond with the county clerk |
| When it’s used | After payment, settlement or resolution | When the claimant won’t release and the property must be cleared |
| The dispute | Resolved | Continues, with the bond as security |
| Cost | Payment or settlement of the claim | Bond premium, plus any collateral the surety requires |
Is a Lien Release Bond Automatically Approved?
No. Because a dispute already exists, sureties treat lien release bonds as higher-risk bonds and underwrite each one individually. They consider the lien amount, the circumstances of the dispute, your financial condition, indemnity and supporting documents.
Having the information in this checklist ready helps speed the process.
- Legal name of the party requesting the bond
- Copy of the recorded lien affidavit
- Amount claimed and claimant’s name and address
- Property address and legal description
- County and recording or instrument number
- Construction contract or project documents
- Why the lien is disputed
- Financial information requested by the surety
- Any bond form from your attorney or title company
Who Needs a Lien Release Bond?
Property Owners
Owners facing a recorded mechanic’s lien that’s interfering with a sale, refinance or other transaction.
General Contractors
Contractors handling a disputed subcontractor, labor or supplier lien on a project.
Developers & Builders
Builders who need to clear a lien to keep a project, draw or closing on schedule.
Texas Lien Release Bond FAQs
What is a lien release bond in Texas?
It’s the bond to indemnify against lien authorized by Texas Property Code Chapter 53. Once the bond is filed, notice is served and the bond and notice are recorded, the mechanic’s lien is discharged from the property and the bond becomes the claimant’s security.
How large does the bond need to be?
Under Texas Property Code §53.172, the bond is twice the lien amount. If the liens total more than $40,000, it’s the greater of 1.5 times the liens or the liens plus $40,000.
How much does a lien release bond cost?
The premium is based on the bond amount, not the lien amount, and is often around 2% for a one-year term for applicants with good credit, subject to the surety’s minimum premium. For example, a $20,000 lien requires a $40,000 bond, so the premium might be about $800.
Is collateral required for a lien release bond?
Often, yes. Sureties commonly require collateral, sometimes up to the full bond amount, as cash or an irrevocable letter of credit. Collateral is generally returned once the surety is released from the bond.
Where is the lien release bond filed?
With the county clerk of the county where the property is located. The clerk then mails notice and a copy of the bond to the lien claimant by certified mail, and the bond and notice are recorded.
Does the lien claimant lose the claim when a bond is filed?
No. The claimant can sue on the bond, generally within one year after notice of the bond is served. The bond doesn’t decide whether the claim is valid.
Is a lien release bond the same as releasing the lien?
No. A voluntary lien release is signed by the claimant, usually after payment or settlement. A lien release bond uses a surety bond and the statutory filing process to remove the lien from the property while the dispute continues.
Can a lien release bond help when selling a property?
Yes, often. Once the bond and notice are properly recorded, purchasers, lenders and title insurers can rely on that record as Texas law provides, which can clear the way for a sale or refinance.
What happens if the dispute lasts longer than a year?
The premium covers a one-year term. If the bond must remain in force, a renewal premium is typically due each year until the surety is released from the bond.
Do I need an attorney to get a lien release bond?
We can help you get the bond, but lien validity, filing procedures and deadlines can involve legal questions. Consider consulting a Texas construction attorney or title professional when you need legal guidance.
Related Contractor Bonds
Lien release bonds serve a different purpose from the bonds required when a construction contract begins.
Bid Bonds
Guarantee you’ll sign the contract and provide follow-on bonds if your bid wins.
Learn About Bid Bonds →Performance Bonds
Guarantee to the owner that the contract work will be completed.
Learn About Performance Bonds →Payment Bonds
Guarantee payment to qualifying subcontractors, laborers and suppliers.
Learn About Payment Bonds →All Construction Bonds
How construction bonds fit together, plus Texas bond requirements.
Construction Surety Bonds →Request a Texas Lien Release Bond Quote
If a mechanic’s lien is affecting a Texas property or project, we can help you explore bond options and gather what the surety needs.
Bond availability, eligibility, premium, collateral and underwriting requirements vary by surety and applicant. Lavon Insurance provides insurance and surety services and does not provide legal advice.