Illinois Real Estate Practice Exam

What allows construction companies to file a lien for materials furnished for construction but not paid for?

1. Lien

2. Encumbrance

3. Mechanic's Lien

4. Specific Lien

The correct answer is: Mechanic's Lien

The correct answer is Mechanic's Lien. This legal provision is specifically designed to protect the rights of contractors and suppliers who provide materials and services for construction projects. When a construction company supplies materials or performs work and does not receive payment, they can file a Mechanic's Lien against the property where the work was performed. This lien serves as a public notice of the debt and can affect the property owner's ability to sell or refinance their property until the debt is resolved. Mechanic's Liens are crucial in the real estate industry because they provide a means of recourse for those who contribute to the improvement of a property but may otherwise be unable to secure payment. The other options do not specifically pertain to the act of filing a lien related to construction materials and services. For instance, while a Lien generally refers to any claim or encumbrance against property, it does not denote the special provisions that Mechanic's Liens provide for contractors and suppliers. Encumbrance broadly refers to any claim that may affect the transferability of the property. Specific Lien could apply to different contexts but does not pinpoint the unique provisions for construction-related debts. Thus, Mechanic's Lien is the most accurate term that encapsulates this