A homeowner fails to pay a contractor $45,000 for completed work. The contractor files a mechanics lien but the property sells before resolution. What happens to the lien proceeds?
Correct Answer
C) Lien attaches to sale proceeds up to the amount owed
Under Virginia mechanics lien law, a valid lien attaches to the sale proceeds of the property up to the amount of the valid claim.
Why This Is the Correct Answer
Under Virginia mechanics lien law, a validly filed lien does not disappear when the property is sold. Instead, the lien transfers and attaches to the sale proceeds up to the amount of the valid claim. This protects the contractor's right to payment even after a title transfer.
Why the Other Options Are Wrong
Option A: Contractor receives full payment from sale proceeds
The contractor does not automatically receive full payment. The lien only attaches to the sale proceeds up to the amount owed — and must still be resolved through proper legal process. Full payment is not guaranteed; it depends on whether sufficient proceeds exist and whether there are competing priority claims.
Option B: Contractor must pursue separate legal action
Separate legal action is not required simply because the property sold. Virginia law allows the lien to follow the proceeds, so the contractor retains the same lien rights without needing to start an entirely new lawsuit.
Option D: Lien is automatically discharged
A valid mechanics lien is not automatically discharged upon sale of the property. It survives the sale and attaches to the proceeds. Discharge requires either payment, a court order, or a bond substitution.
Memory Technique
Picture the lien as a 'sticky tag' on the property. When the property is sold, the tag moves to the cash proceeds — it sticks to the money, not just the land.
More Virginia Questions
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