Updated Sept 2026 | Private Projects: 770 ILCS 60

Bonding off a mechanics lien means removing the claim from the property and substituting a surety bond in its place. Section 38.1 of the Illinois Mechanics Lien Act (770 ILCS 60/38.1) sets out exactly how it works, what the bond must look like, and what happens to your claim once the substitution is ordered.

For a lien claimant, the news is better than it sounds. The property stops being your security, but a bond worth 175% of your claim takes its place, and your action moves from a foreclosure against real estate to a direct claim against a solvent surety.

What Bonding Off Actually Does

Say you are a subcontractor on an Illinois project and you finish the job unpaid. You record a claim for lien with the county recorder. From that point, the real estate is your security: if the owner never pays, you sue to enforce the lien and recover out of the proceeds of a court-ordered sale.

Section 38.1 gives the owner and certain other parties a way out of that. They petition the circuit court to substitute an eligible surety bond for the property. If the court grants the petition, it enters an order that does two things (Sec. 38.1(e) and (f)):

1. It substitutes the bond for the property securing the lien claim.
2. It substitutes your right to recover on the bond for the causes of action you could otherwise have asserted under Secs. 9, 27, and 28 of the Act.

The real estate and the money due from the owner to the contractor under the original contract is discharged. The bond becomes the fund you collect from.

Who Can Petition to Bond Off a Lien

Sec. 38.1(a)(1) defines an “applicant” broadly. It includes:

• an owner, another lien claimant, or any other person with an interest in the property against which the lien is asserted;
• an association representing owners, organized under any statute or governed by the Common Interest Community Association Act; and
• any person who may be liable for payment of the lien claim, including an owner, a former owner, such an association, or the contractor or subcontractor.

So a general contractor or a subcontractor up the chain can bond off a lien below it, which is common when the prime contract obliges the contractor to keep the property free of liens.

When a Lien Can Be Bonded Off

Sec. 38.1(a)(3) defines the “lien claim” that can be bonded over as one where any of the following has happened:

• a notice or amended notice of claim for lien under Sec. 24 has been served;
• a claim or amended claim for lien under Sec. 7 has been recorded; or
• a suit to enforce a lien under the Act has been filed, including an action under Sec. 9, 27, or 28.

The section applies to liens arising under Sec. 1 or Sec. 21 and to claims or actions under Secs. 9, 27, and 28.

There is a timing limit once litigation starts. The petition goes to the clerk of the circuit court of the county where the property is located not the county clerk. If an action to enforce the lien is already pending, the applicant may file at any time before 5 months after the lien claimant filed its complaint or counterclaim to enforce the lien.

What Counts As an Eligible Surety Bond

This is where a lien claimant should focus. Sec. 38.1(a)(2) requires all of the following:

• Amount: 175% of the lien claim, excluding interest and attorney’s fees.
• Submission to jurisdiction. The bond must state that the principal and surety submit to the jurisdiction of the circuit court of the county where the property is located, and that a final non-appealable judgment in favor of the lien claimant is a judgment against the principal and surety for the amount found due, including interest and attorney’s fees, capped at the full amount of the bond.
• Duration. It continues in effect until the adjudicated amount is completely satisfied, or the full bond amount is paid, or there is a final determination with all appeal periods expired that the claim is invalid, void, released, or time-barred.
• Licensed surety. The surety company must hold a certificate of authority from the Illinois Department of Insurance specifically authorizing it to execute surety bonds.
• Financial strength. The surety must carry an A.M. Best rating of at least A with no rating modifier, a positive or stable outlook, and a financial size category of at least IX.
• Local approval. If the property sits in a judicial circuit with its own list of approved sureties, the bond must come from a surety specifically authorized for that circuit by order or rule.

A bond that fails any of these is not an eligible surety bond, and that is the ground on which most objections are fought.

What the Petition Must Contain

Under Sec. 38.1(c), the petition is verified and must include the applicant’s and the lien claimant’s names and addresses; the attorney of record for the lien claimant, or the preparer of the recorded lien claim if no suit has been filed; the name and address of the owner of record, or of the owners’ association if it is an obligor on the bond; a description of the property, including both the common and legal descriptions of any real estate; a copy of the lien claim with its recording details if no enforcement proceeding is pending; a copy of the proposed bond; a certified copy of the surety’s certificate of authority; and an undertaking by the applicant to replace the bond if it ever stops qualifying as an eligible surety bond.

Your Options Once a Petition Is Filed

The petitioner must personally serve you, or send by certified mail with return receipt requested, a copy of the petition with a statutory notice. The notice warns that if you do not object in time, you waive the right to object and the court will substitute the bond.

Option 1: Object

File your objection with the clerk of the circuit court within 30 days after you receive the notice, or 33 days after it was mailed by certified mail, whichever date is earlier. Watch that “whichever is earlier” mailing starts a clock that can expire before 30 days from actual receipt.

If you object, the petitioner may move for a hearing on the adequacy of the proposed bond. At that hearing the petitioner carries the initial burden of establishing, prima facie, that the bond is an eligible surety bond. Once that showing is made, the burden shifts to you to prove it is not. If the court finds the bond eligible, it enters the substitution order anyway.

If you let the 30 days pass without objecting and the petition complies with the statute, the court enters the order on the petitioner’s ex parte motion, provided it finds the bond eligible.

Option 2: Accept the Substitution and Pursue the Bond

Once the order is entered, the petitioner must send copies to you and to everyone who was entitled to a copy of the petition plus, if an enforcement proceeding is pending, to everyone who has appeared and must record a copy of the order with an executed copy of the bond with the recorder of deeds in every county where the property is located.

Your remedy from that point is set out in Sec. 38.1(h): the action on the bond is in equity against the principal and surety of the bond. There is no separate administrative claim process to start. If a proceeding to enforce the lien is already pending, the bond principals and sureties become parties to that proceeding automatically upon approval of the bond, and the other parties to the lien count may be dismissed. Bringing an action on the bond does not prevent you from bringing other claims that do not arise under the Act, such as a straight breach of contract suit.

The principal and surety are jointly and severally liable for what you would have recovered under the Act had no bond been furnished, with the surety’s exposure capped at the face amount of the bond (Sec. 38.1(i)). Their defenses are limited: under Sec. 38.1(j), they may raise only defenses that could have been asserted against the lien claim by the bond principal or by the owner of record at the time the contract was let.

Attorney’s Fees and Who Counts As the Prevailing Party

Sec. 38.1(i) awards reasonable attorney’s fees to the prevailing party, and Sec. 38.1(a)(5) defines that term precisely:

• You are the prevailing party if you are awarded a judgment of at least 75% of your lien claim.
• The bond principal is the prevailing party if you are awarded a judgment of less than 25% of your lien claim.
• Land anywhere in between and no one is the prevailing party.

The fee awards are capped differently. A lien claimant’s fees are limited to whatever remains on the bond after the claim and interest are paid. A bond principal’s fees are limited to 50% of the amount of the lien claim.

In measuring the percentage, the amount of your lien claim is reduced by any payments you received from any source before judgment. And if any party pays you within 5 months of the filing of a complaint under this section, the bond principal may petition the court to reduce the bond by the amount of that payment.

If the Bond Stops Qualifying

Sec. 38.1(k) closes the obvious gap. If a bond ceases to be an eligible surety bond say the surety is downgraded the principal’s and surety’s liability continues until the court enters an order replacing it with another eligible bond. The original bond stays in effect as substitute security until it is replaced. That is also why every petition must include the applicant’s undertaking to provide a replacement.

Why Bonding Off Is Not a Defeat

Your security is still there, and it is bigger. The bond has to be written at 175% of the claim, by a surety with a certificate of authority from the Department of Insurance and an A.M. Best rating of A or better with a size category of at least IX. For many claimants, that is a more reliable source of payment than a contested foreclosure sale of real estate that may already carry a mortgage entitled to priority under Sec. 16.

Collection is more direct. An action in equity against a principal and a surety is simpler than a foreclosure that requires joining owners, lenders, and every other lien claimant under Sec. 11, then waiting for a sale and a distribution of proceeds.

It often shortens the path to payment. Parties bond off liens because they need the title cleared to close a sale, to draw on a loan, or to satisfy a contract requirement to keep the property lien-free. The same pressure that makes them file the petition frequently gets your invoice paid before the case goes anywhere.

The one thing that does not change is your paperwork. Everything the Act required to perfect the lien in the first place the sworn statements, the notices, the timely recording is what your claim against the bond rests on. Follow the lien process as if no bond will ever appear.