The Construction Lien Act (Act 497 of 1980) regulates the use of a Michigan mechanic's lien release bond to accomplish the discharge of a lien against real property. A surety bond vacates and discharges a claim of lien filed by a contractor, subcontractor supplier or laborer if the appropriate procedure is adhered to. Section 116(1) states that the surety bond must be filed with the county clerk for the county in which the property encumbered by the lien is located and a copy is given to the lien claimant. The surety bond must be written in the penal sum equal to no less than twice the amount claim, conditioned on the payment of any sum for which the lienholder may obtain by judgment on the same.
Within tens days of filing of the Michigan mechanic's lien discharge bond, the county clerk must notify all lienholders that the surety bond has been filed, the amount of the bond and the name of the surety company issuing the bond. The lienholder(s) is allowed ten days after being from notice to file an objection to the sufficiency of the surety. If an objection is made, the county clerk will not approve the bond until the surety has appeared before the county clerk and answered under oath those questions asked by or on behalf of the lienholder(s) regarding the surety's financial wherewithall. If an objection is not filed within the ten day notice period or if the county clerk approves the bond after the surety's statutory response, then county clerk must immediately notice the principal and the lienholder(s) named in the bond that a good and sufficient surety bond has been filed in accordance with the law and issue a certificate acknowledging the same. That certificate must be at once flied with the register of deeds where the claim of lien was recorded which immediately discharges the lien. If a lienholder has already initiated a legal action to enforce the claim of lien and a notice of lis pendens has been recorded, the filing of the certificate also operates as a discharge of the lis pendens.
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