Grandma has entered a contract with Wolf Renovations Inc. to have some improvements made on her cottage before she sells it. Wolf Renovations Inc. hires the Three Little Pigs Electrical Co. to assist in the renovations. 10 days after the job is completed, Three Little Pigs Electrical Co. files a builder's lien on the property, claiming that Wolf Renovations Inc. has not paid them even a penny for their labour. In response to this lien, when she pays Wolf Renovations Inc., Grandma holds back 5% of the total contract price for the work done. When Little Red Riding Hood, a prospective purchaser, looks at the cottage a week later, she expresses a concern over the lien registered on title. Grandma assures Red that if she buys the house, she will not have to worry about the lien because adequate money has been held back.

Which of the following statements is TRUE?

1. (1)Three Little Pigs Electrical Co. could properly file a caveat, thus preventing the transfer of the property to Red.
2. (2)If Red buys the property and Wolf Renovations Inc. goes bankrupt, Red may be liable to Three Little Pigs Electrical Co. for the money owed to them.
3. (3)If Red decides to buy the property, she has an automatic right to withhold 10% of the purchase monies since there is a builder's lien registered on title.
4. (4)None of the above statements are true.