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

What does filing a Notice of Commencement protect for contractors?

1. Ability to issue change orders

2. Right to bill for additional work

3. Priority of payment over all other claims

4. Legal protections against unauthorized work

The correct answer is: Priority of payment over all other claims

Filing a Notice of Commencement is a legal document that provides important protections for contractors, primarily by establishing their priority of payment for the work performed. When this notice is filed, it creates a public record of the project and indicates that work has been authorized to begin. This means that contractors who have filed the notice are recognized in the order of payment rights over unpaid claims that may arise later in the project. This is crucial in construction projects where multiple parties may have interests in the same property and may be seeking payments for various reasons. By establishing this priority, contractors can protect themselves against potential claims from suppliers or subcontractors who may seek compensation for services rendered. In many jurisdictions, this priority can help contractors recover funds owed to them even if the property owner faces financial difficulties or disputes arise over payments. Thus, the correct choice revolves around the legal assurance that a contractor's right to payment is acknowledged before other claims, making it a vital aspect of construction law and contractor rights.