Maryland Home Improvement PSI Practice Exam

If an owner hires a construction company, fails to pay upon completion, and the company files a lien, what type of lien is created?

1. An equitable lien.

2. A mechanic's lien.

3. A lien by default.

4. A workman's lien.

The correct answer is: A mechanic's lien.

When an owner hires a construction company and subsequently fails to pay upon completion, the construction company has the right to file a mechanic's lien. This type of lien is specifically designed to protect contractors, subcontractors, and suppliers who have provided labor or materials for a construction project. By filing a mechanic's lien, the contractor essentially claims a legal right over the property in question until payment is made. The mechanic's lien serves as a security interest in the property, allowing the contractor to seek compensation through a legal claim that could potentially lead to foreclosure on the property if the debt remains unpaid. This is essential for ensuring that those who provide services in the construction industry can secure their payments and maintain their financial stability. Other types of liens mentioned, like an equitable lien or workman’s lien, are not standard classifications associated directly with construction work and its related disputes. An equitable lien is usually created through a court ruling based on fairness, rather than through the provision of services, while lien by default is not a recognized legal term in this context. Therefore, the identification of this scenario as a mechanic's lien is the most accurate and applicable classification.