Illinois Real Estate Practice Exam

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Which type of lien is filed when a company furnishes materials for the construction of a house and is not paid?

Encumbrance
Mechanic's Lien
Lien
Specific Lien

The correct answer is: Mechanic's Lien

The correct answer is a Mechanic's Lien. This type of lien is specifically designed to protect contractors, subcontractors, and suppliers who provide labor, materials, or services for the improvement of real property but have not been compensated. When a construction company or supplier furnishes materials for a project and does not receive payment, they can file a Mechanic's Lien against the property. This legal claim asserts that the involved parties have a right to payment and that the owed amount takes precedence over other claims against the property's title. This process ensures that those who improve a property are compensated for their contributions, providing a level of security for both laborers and suppliers in the construction industry. Encumbrance is a broader term that refers to any claim against a property that can affect its transferability, while a lien is a type of encumbrance specifically related to debts owed. Specific Lien refers to a lien that applies to a specific asset, but in this context, the Mechanic's Lien is the more precise and relevant form of lien related to construction and unpaid materials or labor.