Property owners and contractors involved in the construction activity on real property may find their properties subject to contractor, subcontractor or materialmen's liens. A Tennessee mechanic's lien release bond is a mechanism by which a party may immediately remove a lien from real property, granting time for negotiation or litigation with the lienholder.
Pursuant to Tennessee Code Title 66. Property § 66-11-142, If a lien is filed by a recorded instrument under the Property Code, any person may record a surety bond to indemnify against the lien. The bond must be recorded with the register of deeds of the county in which the lien was filed. The surety bond must be in the amount of the lien claimed and written on a corporate surety authorized and admitted to do business in the State of Tennessee, and licensed by the state to execute bonds as surety. The Tennessee mechanics lien release bond must be conditioned upon the obligor or obligors on the bond satisfying any judgment that may be rendered in favor of the person asserting the lien. The surety bond must include the book and page or other reference and the register of deeds where the lien is recorded. The recording by the register of a surety bond to indemnify against a lien operates as an immediate discharge of the lien. After recording the bond, the register of deeds returns the original bond to the person filing it. The register shall index the recording of the bond to indemnify against the lien in the same manner as a release of lien. The person or entity asserting the lien may make the principal on the bond parties to any action to enforce the claim, and any judgment recovered may be against all or any of the principal(s) and surety(ies) on the bond.
Under subsection (b)(1),When a prime contractor or remote contractor has provided a valid payment bond for the benefit of potential lien claimants, a copy of that surety bond may be recorded in lieu of filing a Tennessee mechanic's lien release bond, to discharge a lien asserted by the lien claimants. A copy of the bond may be recorded with the register of deeds in lieu of the bond provided in subsection (a) to discharge such a lien. Upon recording with the register of deeds, the contractor or owner shall notify the surety executing the bond, and the lien on the property shall be discharged. The person asserting the lien may make the obligors on the bond parties to any action to enforce the claim, and any judgment recovered may be against all or any of the obligors on the bond.
(2) The bond recorded pursuant to this subsection (b) shall:
(A) Be in a penal sum at least equal to the total of the original contract amount;
(B) Be in favor of the owner;
(C) Be executed by:
(i) The original contractor as principal; and
(ii) A sufficient corporate surety authorized and admitted to do business in this state and licensed by this state to execute bonds as surety; and
(D) Provide for payment of the lien claimant, whether the lien claimant was employed or contracted with by the person who originally contracted with the owner of the premises or by a remote contractor.
(c) The register of deeds may record any bond recorded under this section and return the original to the person providing the bond.
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