A general contractor subcontracts electrical work valued at $25,000. The electrical subcontractor fails to pay their suppliers. Under Florida Statutes Chapter 713, what is the general contractor's potential lien exposure?
Correct Answer
C) $25,000 maximum
Under Florida Statutes Chapter 713, the general contractor's lien exposure is limited to the amount owed to the subcontractor, which is $25,000 in this case. The contractor's property may be subject to liens up to this amount for unpaid supplier bills.
Why This Is the Correct Answer
Under Florida Statutes Chapter 713, the general contractor's lien exposure is capped at the amount of the subcontract. This means the maximum lien exposure equals the value of work performed by the subcontractor who failed to pay suppliers. In this case, since the electrical subcontract was valued at $25,000, the general contractor's maximum lien exposure is $25,000, even if the unpaid supplier bills exceed this amount.
Why the Other Options Are Wrong
Option A: $0 - no liability for subcontractor debts
This is incorrect because general contractors do have potential liability for subcontractor debts under Florida's lien law. The contractor cannot simply ignore unpaid supplier claims when their subcontractor fails to pay.
Option B: $5,000 maximum
This amount has no basis in the statute or the facts presented. There is no $5,000 cap mentioned in Florida Statutes Chapter 713 for lien exposure.
Option D: Unlimited liability
This is incorrect because Florida law specifically limits the general contractor's lien exposure to the amount of the subcontract, providing protection against unlimited liability for subcontractor debts.
Memory Technique
Think 'Contract Cap' - the general contractor's lien exposure is capped at the subcontract amount, like a ceiling that cannot be exceeded.
Reference Hint
Florida Statutes Chapter 713 - Construction Liens, specifically sections dealing with general contractor liability for subcontractor debts
More Business & Finance Questions
A contractor's license expires on March 31st. If they submit a renewal application on April 15th, what additional requirement must be met under Florida regulations?
A general contractor purchases equipment worth $45,000 with a useful life of 9 years and no salvage value. Using straight-line depreciation, what is the annual depreciation expense?
In Florida, what is the minimum workers' compensation insurance coverage required for construction companies with employees?
What is the typical recommended coverage amount for general liability insurance for a small to medium-sized general contracting business?
A contractor estimates startup costs of $75,000 for equipment, $25,000 for initial inventory, $15,000 for insurance premiums, and $10,000 for working capital. They can finance 70% of the total. How much cash do they need?
People Also Study
Previous Question
Equipment purchased for $125,000 is being depreciated using the Modified Accelerated Cost Recovery System (MACRS) with a 5-year recovery period. What is the depreciation rate for the second year?
Next Question
A general contractor employs 18 workers and is considering hiring practices. At what point must the contractor comply with Title VII anti-discrimination requirements?