What a mechanic's lien discharge bond is
When a contractor, subcontractor or supplier records a mechanic's lien on a property, the owner or general contractor can post a bond to release the lien. The claim then moves from the property to the bond, so the property can be sold or refinanced while the dispute is settled.
In South Dakota
South Dakota's mechanics lien law, SDCL chapter 44-9, has no procedure for posting a bond to discharge a lien. Instead, the owner, the owner's agent or the contractor can serve a written demand to sue; if the lien holder does not sue within 30 days, the lien is forfeited and the register of deeds cancels it on affidavit.
- A title insurer may still ask for a private indemnity bond before insuring over a lien; that is a private arrangement, not a statutory discharge bond.
You need this bond if you're
- A property owner facing a mechanic's lien
- A general contractor whose subcontractor or supplier filed a lien
- A developer who needs clear title to sell or refinance
- A lender that requires the lien removed before funding
What the surety looks at
The lien, the dispute behind it and your finances. Because the bond can pay out if the claimant wins, sureties often look closely at the dispute.