Real Estate Council of Alberta Fundamentals Practice Exam

What type of lien involves claims for unpaid services exceeding $300?

1. Construction lien

2. Mortgage lien

3. Financial claim lien

4. Encroachment lien

The correct answer is: Construction lien

A construction lien is specifically designed to secure the right of those who provide services or materials for the construction or improvement of a property. When services or materials are provided and payment is not made, those involved in the construction process can file a construction lien against the property in question. This legal claim protects the interests of contractors, subcontractors, and suppliers, ensuring they have the opportunity to seek the amounts owed to them. The stipulation that the unpaid services exceed $300 is significant, as it often serves as a threshold in many jurisdictions to establish the validity of the lien. If the amount owed is less than this specified amount, the lien may not be enforceable or may not meet certain legal requirements. In contrast, other types of liens such as mortgage liens deal specifically with loans secured by real estate, financial claim liens may involve various financial transactions but do not specifically pertain to construction services, and encroachment liens relate to situations where a property owner builds on land that they do not own or encroaches on a neighbor's property. These latter types do not focus on unpaid services related to construction activities, making the construction lien the most relevant choice for claims arising under such circumstances.