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?

Question

Quizplus · Accepted Answer

Under the common law rule for distribution of funds to lienholders, the lienholders are paid in the order in which their liens were filed. Therefore, Capital will receive $72,800 (140,000/300,000 x 156,000) and Old Fort will receive $83,200 (160,000/300,000 x 156,000).

In 2015, Capital Drywall and Old Fort Supplied Materials to Complete