A subcontractor files a lien for $18,500 on a residential property. The property owner disputes the amount and deposits $20,000 into the court registry. What happens to the lien?
Correct Answer
B) The lien is transferred to the deposited funds
Under Georgia lien law, when a property owner deposits funds equal to or greater than the lien amount into the court registry, the lien is transferred from the property to the deposited funds.
Why This Is the Correct Answer
Under Georgia's lien substitution statute (O.C.G.A. § 44-14-364), when a property owner deposits funds into the court registry equal to or greater than the lien amount, the lien is legally transferred from the real property to those deposited funds. This mechanism protects the property owner's ability to sell or refinance while preserving the lien claimant's security in the deposited money.
Why the Other Options Are Wrong
Option A: The lien is reduced to the deposited amount
The lien is not 'reduced' to the deposited amount — the lien amount remains the same ($18,500). The deposit simply shifts the security from the property to the cash. The subcontractor still has the right to claim the full lien amount through the court proceeding.
Option C: The lien is automatically released
The lien is not automatically released. The dispute over the lien amount ($18,500) still needs to be resolved by the court. What changes is where the security sits — it moves from the property to the deposited funds, but the lien itself survives as a claim against those funds.
Option D: The lien remains until court resolution
While the lien dispute will ultimately be resolved by the court, the lien does not 'remain on the property' after a proper deposit into the court registry. Georgia law specifically provides that the deposit transfers the lien, freeing the property from the encumbrance during litigation.
Memory Technique
Think of it like switching bank accounts: the subcontractor's IOU (lien) moves from the house's 'account' to the court's cash 'account.' The debt doesn't disappear — it just has a new home. Transfer, not termination.
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?
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?
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?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Contract Administration
60 questions · 70% to pass
Project Management
60 questions · 70% to pass
Related Study Resources
Previous Question
A homeowner refuses to pay a contractor's final invoice of $12,000. The contractor wants to file a lien. What document must be filed first in Georgia?
Next Question
A Georgia contractor completes work valued at $8,500 and is not paid. How many days after completion of work does the contractor have to file a lien claim?