Asked by Lupita Sanchez on Jul 19, 2024
Verified
Jeff entered into a building contract with Mike under which Jeff agreed to construct a garage on Mike's lot for $60,000. Lumber Supply Company supplied the lumber at Jeff's request, but when Jeff failed to pay for the material within a few weeks after it was supplied, the company filed a construction lien for $30,000 against Mike's property. If Mike ignores the lien claim, and pays the entire $60,000 to Jeff, Mike may be obliged to pay an amount equivalent to the sum he was required to hold back over again.
Construction Lien
A claim made against a property by a contractor or subcontractor who has not been paid for work performed or materials supplied.
Building Contract
A legally binding agreement between a property owner and a contractor for the construction or renovation of a building, detailing the work to be done, materials, costs, and timeframes.
Hold Back
The act of withholding part of a payment or benefit until certain conditions are met or to exert control or influence over a situation.
- Understand the entitlements and duties of entities participating in construction agreements and the implementation of construction liens.
Verified Answer
Learning Objectives
- Understand the entitlements and duties of entities participating in construction agreements and the implementation of construction liens.
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