Question 1

In 2015, Capital Drywall and Old Fort supplied materials to Complete Construction & Demolition, Inc. (Contractor) for the reconstruction of a hotel on U.S. Highway 31 in South Bend, Indiana. Neither Capital Drywall nor Old Fort received payment for those materials. The Contractor went bankrupt. Capital filed a lien on April 25, 2015. Old Fort filed a lien on September 11, 2015. Old Fort is owed $160,000, Capital is owed $140,000. There is $156,000 left to distribute to unpaid lienholders. How much will each receive under the common law rule for distribution of funds to lienholders?

a.Capital receives $70,000 and Old Fort receives $80,000, with the $6,000 being split between them b.Capital receives $140,000 and Old Fort receives $16,000 c.Capital receives $78,000 and Old Fort Receives $78,000 d.Capital receives $72,800 and Old Fort receives $83,200

Question 2

On November 5, 2014, Commercial Builders, Inc., contracted with Concord to construct a steel building that would house a motocross track. This contract called for Concord to begin construction ASAP, and Concord began construction. At the time the construction began, Concord had not yet closed on buying the property, but had been given the go-ahead by the owner for construction to begin. The real estate sale ran into difficulties and did not close. At that time, the building was 85% complete. On January 4, 2015, Concord filed a mechanic's lien against the property. In September 2015, the partially constructed building was completely destroyed by a tornado. Commercial sought to foreclose its lien on the land. The owner said he did not give his consent for the work or a lien. Which of the following is correct?

a.Commercial builders cannot file a lien because there is no work to show for the costs b.Commercial builders can file a lien because the consent of the owner was implied through the contract and the agreement for the building to begin c.Commercial builders cannot file a lien for steel buildings d.Commercial builders cannot file a lien on the property because Concord did not own the property

Question 3

Harbor Builders began construction on three homes in its new division. After construction had begun, the buyers of the homes closed escrow on the homes. The lender for the buyers had the buyers sign affidavits stating that construction had not begun. The buyers gave the lender mortgages on their properties. If Harbor is not paid and the buyers default, who has first rights on the proceeds from the sale of the property?

a.Neither party has priority; they take a pro rata share b.Harbor Builders c.The buyers d.The lender