Building Code Administrators and Inspectors Florida Principle and Practice Licensure Practice Exam

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After what time frame can a lender be held liable for a contractor's failure to pay subcontractors?

30 days
60 days
90 days
120 days

The correct answer is: 90 days

The correct answer is based on the statutory framework governing construction lending and the obligations that lenders have concerning payments to subcontractors. In Florida, lenders can be held liable for a contractor’s failure to pay subcontractors if they are aware that payment was not made, and a certain time period has elapsed. The 90-day timeframe is significant as it allows for both the contractor to complete their payment obligations and for the lender to fulfill their duty in ensuring payments are properly disbursed. This period aligns with legal standards that aim to protect subcontractors and suppliers from non-payment, thereby promoting fair financial practices within the construction industry. Understanding the responsibilities of lenders within this context is crucial. This liability can arise when the lender's funds are not appropriately utilized for the project outcomes, highlighting the importance of diligent oversight in the financial processes of construction projects.