Cengage Advantage Books: Business Law Today, The Essentials 10th Edition by Roger LeRoy Miller

Exercise 17

Business Law Critical Thinking Group Assignment.
Grant owns an older home valued at $45,000. He contracts with Jane's Plumbing to replace the bathtubs and fixtures in both bathrooms. Jane replaces them, and on June 1 she submits her bill of $4,000 to Grant. Because of financial difficulties, Grant does not pay the bill. Grant's only asset is his home, but his state's homestead exemption is $40,000.
1. The first group will determine whether Jane's Plumbing can obtain a lien to pay for the renovations. What type of lien would it be, and how is it created?
2. A second group will determine what would happen if Grant filed for Chapter 7 bankruptcy before Jane took any legal action to collect on her claim. Would Jane be a secured or unsecured creditor? Would Jane's position be different if she had obtained a lien before Grant's petition for bankruptcy? Explain.