The New York Lien Law provides that one can "bond off"
a mechanics lien by posting an "undertaking" (i.e., bond)
in an amount equal to 110% of the amount of the lien. The extra 10%
is intended to cover prejudgment interest which will accrue between
the filing of the lien and resolution of the foreclosure
action.
But what if (as if often the case) the litigation drags along
for years and the bond's amount is now well short of the lien
and accumulated interest (which, in New York state courts is 9% per
annum)? One can apply for a court order requiring the amount of the
bond to be increased.
In a recent case, the lienor, Waterworks Operating Company,
filed a lien in February 2020 for plumbing fixtures it delivered to
a construction project. The owner immediately bonded off the lien.
Waterworks then commenced a lien foreclosure action. After typical
litigation delays, and realizing that the bond amount no longer
covered two years of accrued interest, the lienor's
