The lay vs. lie question frequently generates a lot of fireworks, so it seems an appropriate one to address following the Fourth of July.
Substituting lay (to place or arrange) for lie (to recline or be situated) is undoubtedly one of the most common usage errors in English. Why? Because, for one thing, the past tense of lie is lay. For another, lie can also mean to fib, and using the word correctly might lead to ambiguity in certain instances, as here: Eric is lying about the house.