NASCLA Lien Laws and Payment Procedures

Question 1

What is a 'mechanic's lien' in construction?

Accepted Answer

A legal claim against a property by unpaid contractors, subcontractors, or suppliers for work or materials provided

Answer

A lien placed on a contractor's tools by a creditor

Answer

A lien placed by a mechanic on a vehicle repaired on the job site

Answer

A court order freezing a contractor's bank account

Question 2

Who has the right to file a mechanic's lien in most states?

Accepted Answer

General contractors, subcontractors, material suppliers, and sometimes equipment renters who went unpaid

Answer

Only the general contractor

Answer

Only licensed contractors with more than 5 years experience

Answer

Only parties with a direct contract with the property owner

Question 3

What is a 'preliminary notice' (also called a pre-lien notice) in construction lien law?

Accepted Answer

A written notice sent to the owner early in the project informing them of the sender's potential lien rights

Answer

A notice sent to begin construction

Answer

A notice filed with the court before a lawsuit

Answer

A warning letter sent to a subcontractor about performance issues

Question 4

What happens if a contractor fails to record (file) a mechanic's lien within the statutory deadline?

Accepted Answer

They permanently lose their lien rights on that project

Answer

They can still file the lien with a late fee

Answer

They can file the lien in federal court instead

Answer

The owner must waive all payment objections

Question 5

Which of the following would a 'conditional lien waiver' indicate?

Accepted Answer

The lien release is conditioned upon the receipt of a specific payment — if payment doesn't clear, the lien rights are preserved

Answer

The lien has been unconditionally released upon signing

Answer

The contractor waives all future lien rights on all projects

Answer

The subcontractor releases rights for past and future work unconditionally

Question 6

What is a 'stop payment notice' in construction law?

Accepted Answer

A statutory remedy allowing unpaid subcontractors and suppliers to demand that funds be withheld from the general contractor until they are paid

Answer

A notice from the bank to stop a contractor's check

Answer

A stop-work order issued by a building inspector

Answer

A notice to stop purchasing materials for a project