Insurance & LiensQuestion 578 of 1605
Which statement BEST captures the practical difference between a mechanics' lien and a stop payment notice on a private project?
a.A mechanics' lien is recorded against the contractor's license; a stop payment notice is recorded against the property
b.Both attach to the property and have identical procedures and deadlines
c.A mechanics' lien attaches to the real property; a stop payment notice intercepts construction funds held by the owner or lender
d.A stop payment notice replaces the lien once payment is received
Explanation
A mechanics' lien creates an encumbrance on the real property that can be foreclosed. A stop payment notice does not attach to the property; instead, it directs the owner or lender to withhold construction funds otherwise payable to the contractor, giving the claimant a claim against those funds.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)