A subcontractor files a mechanics' lien for $25,000 but later accepts $18,000 as payment in full. What happens to the lien?
Correct Answer
A) Lien must be released within 30 days
Under Georgia law, when payment is accepted in full satisfaction, the lien claimant must release the lien within 30 days or face penalties.
Why This Is the Correct Answer
Under Georgia law, when a lien claimant accepts payment in full satisfaction of the lien (even if less than the original amount), the claimant must release the lien within 30 days. Failure to do so exposes the claimant to penalties. The lien does not automatically dissolve — it requires an affirmative release action.
Why the Other Options Are Wrong
Option B: Lien remains valid for full amount
The lien does not remain valid for the full amount. Once the claimant accepts $18,000 as payment in full, the original $25,000 claim is satisfied by agreement. The lien can no longer encumber the property for the original amount.
Option C: Lien is automatically reduced to $7,000
The lien is not automatically reduced to $7,000 (the difference between $25,000 and $18,000). When a full-satisfaction payment is accepted, the entire lien obligation is extinguished — there is no automatic partial reduction to a residual balance.
Option D: Lien becomes invalid immediately
The lien does not become invalid immediately upon acceptance of payment. Georgia law requires the claimant to take an affirmative step — filing a lien release — within 30 days. Until the release is filed, the lien technically remains on the property records.
Memory Technique
Accept money → 30 days to clean up. Think of it like closing a tab at a restaurant: once you pay (even if you negotiated a lower bill), the establishment has 30 days to process and clear the transaction. The lien doesn't vanish on its own.
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