What is a lien in construction, and how does it affect builders?

A lien in construction refers to a legal claim or encumbrance placed on a property due to unpaid work or materials. When builders or contractors perform work or supply materials for a project and do not receive payment, they have the right to file a lien against the property. This legal claim serves as a safeguard for contractors, ensuring that they have a potential means to recover the owed amount by asserting their rights over the property.

When a lien is filed, it can affect the property owners in significant ways. If the debt remains unpaid, it can hinder the property owner's ability to sell or refinance the property, as the lien must typically be satisfied before the transfer of ownership can occur. This places pressure on both the owner to settle debts and the builder to ensure they are compensated for their work. In essence, the existence of a lien underscores the importance of proper payment practices in the construction industry, encouraging clear agreements and prompt transactions between parties involved in a project.

The other choices do not accurately describe liens. Tax incentives relate to financial benefits rather than legal claims. Bonds typically provide financial security against contractor failures rather than dealing with payment disputes. Certifications are required for project completion but are not related to claims for unpaid work.