A residential project has a total contract value of $125,000. A subcontractor completes $18,500 worth of work and files a proper preliminary notice. The general contractor has been paid in full by the owner but fails to pay the subcontractor. What is the maximum lien amount the subcontractor can claim against the property?
Correct Answer
A) $18,500
The subcontractor can lien for the value of work performed ($18,500), regardless of payment status between owner and general contractor, provided proper notice was given.
Why This Is the Correct Answer
Under Arizona mechanics' lien law, a subcontractor who has properly served a preliminary 20-day notice can lien the property for the value of the labor and materials they actually contributed — $18,500. The fact that the general contractor has already been paid does not extinguish the subcontractor's independent lien rights. The lien attaches to the improvement on the property, not to the GC's receivable.
Why the Other Options Are Wrong
Option B: $125,000
$125,000 is the total contract value between the owner and the GC. A subcontractor cannot lien for more than the value of their own work, regardless of the overall project value.
Option C: $0 - no lien rights when GC is paid in full
This option reflects the common misconception that once the owner pays the GC in full, the subcontractor loses lien rights. Arizona law does not work this way — the preliminary notice preserves lien rights against the property independent of the owner-GC payment relationship.
Option D: $18,500 plus interest and costs
While interest and attorney's fees can be awarded in a successful lien foreclosure action, the question asks for the 'maximum lien amount' — which is the underlying claim for work performed ($18,500), not the enhanced judgment that may follow a court ruling.
Memory Technique
Arizona lien rule: 'You lien for what you did, not what others owed.' The sub did $18,500 of work → $18,500 lien. Preliminary notice = the key that unlocks lien rights regardless of owner-GC payment status.
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