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. When Mike is notified of the registration of the lien, he must hold back the amount of the lien, or whatever funds he has in his hands at the time, if they should be less than the amount of the claim.

Question

Quizplus · Accepted Answer

Under most construction lien laws, when a lien is filed against a property for unpaid work or materials, the property owner is typically required to withhold payment or retain a portion of the contract amount equivalent to the lien claim to ensure that the claim can be resolved. This is to protect the interests of the unpaid parties and ensure they have a mechanism to seek payment.

Jeff Entered into a Building Contract with Mike Under Which