LIEN LAW, §37: Bonds executed to the county clerk pursuant to
Lien Law, §37 to secure payment of any judgments which might be
recovered by contractors and/or subcontractors for work
performed and/or materials provided in connection with the
improvement of real property are held in the physical custody
of the county clerk and are indexed in accordance with
subdivision 10 of section 37. The bonds should be considered a
court record and permanently retained by the county clerk.
This is in reply to your inquiry concerning two surety bonds each of which is entitled "Undertaking for Discharge of Mechanic's Lien". You ask (i) where and how the bonds are to be indexed on your records, (ii) who physically holds the bonds and (iii) whether the bonds can be returned.
Pursuant to section 37 of the Lien Law, a developer was directed by the Supreme Court to execute the bonds, as principal, to the county clerk to secure payment of any judgments which might be recovered in any action brought to enforce certain claims by contractors and/or subcontractors for work performed and/or materials provided in connection with the improvement of real property. Upon approval of the bonds by the court and filing with the county clerk, a court order will be made discharging mechanics liens in connection with such improvements (Lien Law, §37).
Section 37(10) of the Lien Law addresses how these bonds are to be indexed. Specifically, it states that:
The statute does not expressly indicate who physically holds the bond. We believe, however, that the requirement that bonds be filed with the county clerk implies that they be in the physical custody of the clerk; otherwise the word "indexed" or "recorded" might have been used. Therefore, the original bond should be retained by the county clerk.
With respect to your final question concerning return of the bond, we note that the bond, by its very nature, is the instrument which provides the monetary guarantee that the obligation of the contractor and/or subcontractor will be met. We have been unable to discover any statute which sets forth a time period for the bond to be held by a county clerk. However, since such bonds are filed, rather than recorded, and since there may be an obligation to pay on such bonds for an undetermined period of time after completion of the project, in the absence of a statute specifically providing otherwise, we believe the bond should be considered a court record and permanently retained by the county clerk.
November 16, 1989