What risk involves insufficient safeguards against contractors’ claims on a construction project?

The correct answer is mechanics lien risk, which refers to the possibility that contractors or subcontractors can file a lien against a property if they are not paid for their work. This legal claim enables them to seek payment through the property itself, which can complicate ownership and financing. Insufficient safeguards can heighten this risk, as property owners might not fully vet contractors, fail to secure appropriate payment schedules, or neglect lien waiver requirements. Thus, without proper precautions, property owners may face significant financial repercussions and title complications stemming from these claims.

In this context, financial risk pertains to the potential for monetary loss but does not specifically address the nature of unpaid contractor claims. Market risk is related to changes in market conditions that could affect property values and investment viability, while construction delay risk involves setbacks in project timelines rather than issues of payment and claims from contractors. Hence, mechanics lien risk accurately captures the essence of the problem presented in the question regarding insufficient safeguards against contractor claims.