CSLB Law & Business ExamInsurance and LiensMedium
An owner disputes a validly recorded mechanics lien and wants to sell the property free of the lien cloud while the dispute is litigated. What tool allows the owner to remove the lien from title?
- ARecording a lien release bond equal to 125% of the lien amount
- BFiling a Notice of Cessation
- CRequesting an unconditional waiver from the claimant
- DFiling a stop payment notice against the lender
Show answer & explanationAnswer & explanation
Correct answer: A. Recording a lien release bond equal to 125% of the lien amount
An owner (or other interested party) may record a lien release bond, typically in an amount equal to 125% of the lien claim, which substitutes the bond for the property as security and clears the lien from title so the sale can proceed. The claimant's rights then transfer to the bond rather than the real property.
Why the other options are wrong
- B. A Notice of Cessation relates to halting work, not removing an existing lien from title.
- C. A claimant would not voluntarily waive a disputed, unpaid lien.
- D. A stop payment notice targets lender funds, not the property title itself.
Lien Release Bond
A bond, usually 125% of the lien amount, that can be recorded to remove a mechanics lien from real property title while substituting the bond as security for the claim.
- Bond amount is typically 125% of the lien claim
- Transfers claimant's security interest from property to bond
- Allows property to be sold or refinanced despite a disputed lien
Memory trick: Swap the land for a bond, and the lien cloud is gone.