29-1-501. Substitute security to satisfy lien; filing and effect thereof; action upon security.

(a) Any lien created pursuant to this act filed against any real or personal property is satisfied if the owner of the property, contractor or subcontractor has deposited with the court having jurisdiction over the lien claim a corporate surety bond, letter of credit, cash or cash equivalent of established value approved by the court having jurisdiction over the lien claim in the county where the lien was filed in an amount equal to one and one-half (1 ) times the amount of the lien.

(b) The security shall guarantee that if the lien claimant is finally adjudged to be entitled to recover upon the lien, the principal or his sureties, jointly and severally, in the case of a bond, or the issuer of a letter of credit shall pay the lien claimant the amount of the judgment for at least the amount for which the lien was filed plus costs and attorneys' fees.

(c) The security may be deposited any time prior to entry of a final judgment in an action to foreclose the lien.

(d) The security shall be deposited with the clerk of the court having jurisdiction over the lien claim in the county where the lien was filed.

(e) Upon depositing the security and entry of an order of the court accepting the security, the lien against the property shall be forthwith discharged and released in full, and the security deposited pursuant to this section shall be substituted. The clerk of court shall issue a notice of satisfaction of lien which the owner or lien claimant may file in the office of the county clerk where the lien was filed which shall show that the lien has been satisfied.

(f) A lien claimant whose lien has been satisfied by the substitution of the security pursuant to subsection (e) of this section may bring an action upon the security. The action shall be commenced in the court in which the security was deposited under subsection (d) of this section.