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

What is considered an improper payment by an owner to a contractor?

1. A payment made before notice to owner is received

2. Payments made after a notice to owner has been served and before a waiver has been obtained

3. Payments made with a notice to owner received prior

4. Payments made within the completion period

The correct answer is: Payments made after a notice to owner has been served and before a waiver has been obtained

An improper payment by an owner to a contractor occurs when payments are made after a notice to owner has been served and before a waiver has been obtained. In the context of construction law and lien rights, the notice to owner is a crucial document that informs the property owner of the contractor or subcontractor's involvement in the project. This notice is important because it establishes a timeline and the contractual obligations associated with payments. When an owner makes a payment after the notice to owner has been issued but before the contractor provides a waiver of lien rights, it can create a potential risk of a lien being placed on the property. This happens because the contractor may have not yet received full payment for their services and could still pursue a claim against the property owner, particularly if they have not provided documentation absolving the owner from further claims. Therefore, to ensure that the payment is proper and to protect the owner from future claims, it is essential to have a lien waiver in place before making any payments post-notice. Understanding this process emphasizes the importance of adhering to proper protocols in construction payment transactions to mitigate the risk of legal complications and ensure a smooth project completion.