A subcontractor files a lien for $18,000 on a residential property. The general contractor disputes the amount, claiming only $12,000 is owed. What must happen before the lien can be foreclosed in Georgia?
Correct Answer
B) A bond equal to 125% of the lien amount must be posted
Georgia law requires posting a bond equal to 125% of the disputed lien amount before foreclosure proceedings can begin.
Why This Is the Correct Answer
Option B is correct. Under Georgia lien law, before a disputed construction lien can be foreclosed, the disputing party must post a bond equal to 125% of the lien amount. Calculation: $18,000 × 1.25 = $22,500. This bond protects the lien claimant while allowing the dispute to proceed without clouding title.
Why the Other Options Are Wrong
Option A: The dispute must be resolved through arbitration
Option A is incorrect because mandatory arbitration is not a prerequisite for lien foreclosure in Georgia. While parties may choose arbitration, the law does not require it before a lien can be foreclosed.
Option C: The lien must be validated by the licensing board
Option C is incorrect because the Georgia Construction Industry Licensing Board does not validate liens. Lien validation is a court function, not a licensing board function. The board handles licensee discipline, not lien adjudication.
Option D: The homeowner must approve the foreclosure
Option D is incorrect because homeowner approval is not required before a lien foreclosure proceeds. Lien foreclosure is a legal remedy available to claimants regardless of whether the property owner approves.
Memory Technique
Pre-foreclosure bond = 125% = 'one-quarter more.' To foreclose over a dispute, you need the lien amount plus a quarter more. Remember: Foreclose = 125%; Release = 150%. As the stakes go up (release vs. foreclose), so does the percentage.
More Georgia Questions
A contractor discovers that a building permit was issued in error and the project violates setback requirements. According to Georgia regulations, what is the contractor's primary obligation?
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Which situation would require a Georgia contractor to obtain workers' compensation insurance?
A contractor receives a stop work order from the local building official. The contractor continues working despite the order. What is the typical penalty range?
A contractor's license expires on June 30th. They submit a renewal application on July 15th. What additional requirement must they meet?
A Georgia contractor completes work valued at $15,000 on March 1st. The property owner fails to pay. What is the deadline for filing a materialman's lien?
A contractor fails to pay workers' compensation premiums and coverage lapses. An employee is injured the next day. What is the contractor's liability?
A contractor discovers that the local building official is interpreting a code provision differently than expected. What is the proper appeal process in Georgia?
A contractor's annual payroll is $450,000. If the workers compensation rate is 8.5 per $100 of payroll, what is the annual premium?
What is the threshold amount above which a contractor must be licensed in Georgia?
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Under Georgia's Right to Lien Act, when must a contractor provide a lien waiver upon payment?
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A contractor employs workers in both construction and office roles. The construction rate is 11.2 per $100 and office rate is 0.8 per $100. Construction payroll is $85,000 and office payroll is $45,000. What is the total workers compensation premium?