Texas Bond to Indemnify Against Lien
Definition and meaning
A Texas Bond to Indemnify Against Lien is a legal document used to secure the payment of any claims related to a lien against a property. This bond ensures that the obligee, who holds the lien, is compensated if their claim is proven valid. The bond is typically executed by a principal who wishes to protect themselves from potential financial liabilities associated with the lien.
Who should use this form
This form is ideal for individuals or businesses involved in construction or improvement projects on real property. If a contractor or subcontractor has filed a lien against your property, you may need this bond to indemnify against that claim. Additionally, property owners seeking to clear a lien should also consider using this bond to ensure their financial security.
How to complete a form
Completing the Texas Bond to Indemnify Against Lien requires careful attention to detail. Here are the basic steps:
- Fill in the bond number and lien number at the top of the form.
- Provide the names and addresses of the principals and the obligee.
- Indicate the amount of the bond you are willing to secure.
- Attach Exhibit "A" which describes the property subject to the lien.
- Sign the bond and have it notarized.
Legal use and context
The Texas Bond to Indemnify Against Lien is governed by the Texas Property Code. It is used in scenarios where a claim of lien is made on property. This bond serves as a legal safeguard that allows a property owner to dispute the lien while ensuring the claimant can still receive compensation if the lien is deemed valid.
Key components of the form
The key components of the Texas Bond to Indemnify Against Lien include:
- Bond Number: A unique identifier for the bond.
- Principal Information: Names and addresses of individuals or entities responsible for the bond.
- Obligee Information: The entity that holds the lien and may benefit from the bond.
- Bond Amount: The maximum amount payable under the bond.
- Exhibit "A": Attached document that includes a detailed description of the property related to the lien.
What documents you may need alongside this one
When preparing to submit the Texas Bond to Indemnify Against Lien, you may need to gather the following documents:
- A copy of the lien claim filed against the property.
- Property deed or title showing ownership.
- Any related contracts or agreements pertinent to the claim.
- Identification documents for the individuals or entities involved in the bond.
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FAQ
A Mechanics Lien Release Surety Bond is a surety bond required if the owner's property has had a lien filed against it.The bond guarantees the contractor who placed the lien any payment that is still due to them with interest and cost should they win the case in a court of law.
The process of bonding off a mechanics lien starts after a claimant has filed a mechanics lien. After the claim is made, a general contractor or a property owner can contact a surety bond company to purchase a surety bond that replaces the value of the lien that was filed against the property.
In the event that the contract is breached and payment is not received, an affidavit for mechanics' lien may be filed to place a lien on the project.
When the lien is bonded off, the surety company (or, in the case of a general contractor bonding off the lien itself, the general contractor) is guaranteeing payment of a claim if the claimant prevails in court enforcing the claim.
The release of lien bond allows the owner to discharge the mechanic's lien and returns the legal right to sell or deal with the property to the owner. The bond guarantees the contractor who placed the lien any payment that is still due to them with interest and cost should they win the case in a court of law.
The simplest way to prevent liens and ensure that subcontractors and suppliers are paid is to pay with joint checks. This is when both parties endorse the check. Compare the contractor's materials or labor bill to the schedule of payments in your contract and the Preliminary Notices.
A Release of Mechanic's Lien Bond is a type of surety bond that clears the mechanic's lien from the property. These bonds can also be called a Discharge of Mechanic's Lien Bond. By clearing the lien, the owner is free to sell or use the property for other purposes.