A North Dakota mechanic's lien release bond is a valuable remedy available to property owners that find themselves subject to a mechanic's lien. Also known as a contractor's lien bond, this method is available to a property owner or "any party with a substantial interest" in the property. The process for discharging a lien by bond requires the principal to prepare an application for the district court of the county in which the mechanic's lien was filed. The principal must execute an affidavit describing in detail the applicant's interest in the parcel and clearly state that said applicant has a defense against collection of the lien or part of it, that there exists a controversy between the applicant and lienholder as to the validity and/or amount of the lien, and an affirmative statement the the principal seeks to discharge the lien by surety bond. The lien discharge bond protocol is not available to contractors therefore the owner or party with sufficient interest must make the request.
Concurrent with filing of the affidavit and application the applicant must provide a North Dakota mechanic's lien release bond. The surety bond must include the jurisdiction, identify the parties, name the appropriate beneficiary, lien recording details, and a that the surety guarantees payment in full of the lien claim and legal costs up to the penal sum of the surety bond should the lienholder prevail in a civil action. The state statute (NDCC 35-21-02) requires the surety bond to be equal to no less than the amount of the lien and executed by two sureties (unless the surety is licensed to write surety bonds in the state). A copy of the bond and application must be served on the lienholder personally or by registered mail. The lienholder is allowed seven days to object to the sufficiency of the surety(ies). If an objection is filed, then a hearing is set. If the lienholder raises no objection then the clerk of district court must file an order discharging the lien and enters the same into the North Dakota electronic property index.
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