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New laws in Illinois for 2017

 

Introduction

Approximately 200 new laws go into effect in Illinois in the new year. Here is a link to a complete list of the new laws and changes for 2017.

http://abc7chicago.com/politics/new-laws-2017-illinois-laws-that-take-effect-january-1/1665227/

Of particular interest to Illinois small businesses as well as our firm’s clients are the following (excerpted from article above):

Illinois Public Construction Bond Act (HB 5660/PA 99-0673): Amendment provides that verified notice of claim from a subcontractor shall be deemed filed on the date personal services occurs or the date when the verified notice is mailed.

Employee Sick Leave Act (HB 6162/PA 99-0841): Allows employees to use personal sick leave benefits for absences due to an illness, injury, or medical appointment of an employee’s direct family members (including employee’s child, spouse, sibling, parent, mother-in-law, father-in-law, grandchild, grandparent, or stepparent) on the same terms as for the employee’s own illness or injury.

Illinois Freedom to Work Act (SB 3163/ PA 99-0860): New act prohibits employers from requiring non-compete clauses for low-wage employees. Under the act, “Low-wage employee” means an employee who earns the greater of (1) the hourly rate equal to the minimum wage required by the applicable federal, State, or local minimum wage law or (2) $13.00 per hour.

Illinois Plumbing License Law (HB 5913/PA 99-0504): Requires licensed plumbers to complete 4 hours of continuing education each year in order to renew their license.  Course might be supervised by an Illinois licensed plumber.

Illinois Criminal Code.  (SB 1120/PA 99-0534): New expands on theft to include failure to return equipment in excess of $500 within 3 days after the rental period has expired.

Illinois Condominium Property Act (SB 2359/PA 99-0849): Prevents a condominium instrument such as bylaws or a declaration of condominium from changing the ability of the board of managers to execute bank documents by a majority vote.

Illinois Wage Assignment Act (PA 99-0903): Allows employees to revoke a wage assignment at any time by submitting written notice to a creditor.

Please call us at 847-920-7286 or email us at mark@grzymalalaw.com should you have any questions or wish to discuss the impact of these changes on your business.

All the best to everyone in 2017!

Mark B. Grzymala, Attorney and Principal

mark@grzymalalaw.com

New Illinois Laws for 2016

Introduction

Over 237 new laws go into effect in Illinois in the new year 2016.

We look forward to the new provision of the Illinois Mechanics Lien Act allowing a party to bond over a lien claim which we recently reviewed here:

Illinois adds bond substitution provision to the Mechanics Lien Act

The Changes

Of particular interest to Illinois small businesses as well as our firm’s clients are the following:

Duplicative or Burdensome Small Business Regulations (HB 3887/PA 99-0370): Requires state agencies to examine their rules, administrative regulations, and permitting processes as they pertain to small businesses in order to identify those rules, regulations, and processes that are unreasonable, unduly burdensome, duplicative, or onerous to small businesses.

Elevator Safety (SB 718/PA 99-0022): Provides that the Office of the State Fire Marshall shall authorize the issuance of elevator contractor’s licenses, elevator mechanic’s licenses, inspector’s licenses, and inspection company licenses. The Elevator Safety Review Board no longer has the power to establish fee schedules for inspections of conveyances. Requires that all injuries caused by a malfunctioning conveyance be reported to the Office of the State Fire Marshal within two business days.

Equal Pay Act Changes (HB 3619/PA 99-0418): Provides that the Act applies to all employers (currently only employers with four or more employees). Provides that any violation of the Act will subject employers to a civil penalties. Sets different penalty structures for employees with fewer than four employees and those with four or more employees. Committing public policy violations will subject the employer to a civil penalty not to exceed $5,000.

Equity Crowdfunding (HB 3429/PA 99-0182): Allows companies, particularly start-ups, to build capital by soliciting small amounts of money from many investors over the internet for the purchase and sale of securities. Investors may be accredited or non-accredited. The Secretary of State is allowed to establish rules pertaining to issuance of securities, fees, and notice requirements.

Residential Mortgage License Act Changes (HB 3369/PA 99-0015 ): Amends the Illinois Residential Mortgage License Act 205 ILCS 635/1-1 et seq. to improve the efficiency and include modern best practices in the regulation of the Act.

Consumer Ticket Purchase Protections (HB 3103/PA 99-0431): Attempts to strengthen protection for consumers who purchase tickets from brokers or resellers. Requires ticket brokers and resellers to disclose the registered name and city of the event venue; that the brokers is not the box or office or a licensed agent; that lost and stolen tickets may only be reissued by the brokers or resellers; whether it is registered under this act; it’s refund policy, name and contact information. Additionally, the broker or reseller must guarantee a full refund if the ticket does not grant admission or if the event is canceled and not rescheduled.

Landlords Accumulated Interest (HB 1319/PA 99-0253): Provides that the lessor shall, within 30 days after the end of each 12-month rental period, pay to the lessee any interest that has accumulated to an amount of $5 or more, unless the lessee is in default under the terms of the lease. All accumulated interest that remains unpaid, regardless of the amount, must be paid over to the lessee upon termination of the tenancy.

Mechanics Liens: Substitution of Bond (HB 2635/PA 99-0178): Amends the Mechanic’s Lien Act to establish a process for a property owner to substitute a surety bond for a mechanic’s lien on the property, thus enabling the property owner to sell or refinance the property.

Property Tax Fraud Alert (HB 3672/PA 99-0075): Standardizes the process for property owners to sign up for Cook County’s property fraud alert system. Requires real estate professionals to register with the recorder’s office before filing on behalf of property owners. Preempts home rule.

Power of Attorney (SB 159/PA 99-0328): Makes technical changes to the Illinois Power of Attorney Act relative to health-care powers of attorney.

Property Tax Complaints (HB 2554/PA 99-0098): Amends the Property Tax Code to provide more detailed instruction for all parties involved during the Property Tax Board of Review complaint procedure, outside of Cook County.

Reverse Mortgage Act (SB 1440/PA 99-0331): Creates the Reverse Mortgage Act by rewriting the entire reverse mortgage law. Consolidates duplicative and sometime conflicting state laws regarding reverse mortgages.

Here is a link to more new laws and changes for 2016.

http://www.fox32chicago.com/news/local/59636451-story

All the best to everyone in 2016!

Mark B. Grzymala, President

mark@grzymalalaw.com

Illinois adds bond substitution provision to the Mechanics Lien Act

project of construction and renovation houseIntroduction

On July 30, 2015, Illinois Governor Bruce Rauner signed H.B. 2635 into law. This bill amends the Illinois Mechanics Lien Act  (770 ILCS 60/1 et seq.) and significantly changes Illinois construction law by adding section 38.1 which allows substitution of a bond for an Illinois mechanics lien claim.

Illinois is the last state in the United States to enact such a provision.

Before this amendment, owners or general contractors had the ability to purchase bonds to cover disputed lien claims at a title company.  The title company would then litigate the lien claim if a claimant tried to enforce it. However, the lien claim remained as a cloud on title and there still was a risk of foreclosure. HB 2635 sets forth a formal process for substituting a bond and removes the cloud on title. The amendment does not eliminate mechanics lien rights and a lien will still be a cloud on title until a bond is furnished.

Bond Petition

Generally, this new section (sometimes referred to as a “bonding over” provision) provides that an owner or anyone else with an interest in real estate (such as a lender, other lien claimant or even a condominium association) may file a verified petition with the clerk of the court in the county where the property is located requesting that a surety bond be substituted for a lien claim. The surety bond must be from an insurance company that is rated A or higher by AM Best and be size IX or larger, be in an amount equal to 175% of the lien claim, and must require that the surety and principal BOTH be jointly liable to the lien claimant. Upon granting the petition, the lien would be discharged and the parties would proceed with a lawsuit against the bond as well as any other causes of action such as for breach of contract, fraud, deceptive practices, account stated, conspiracy, enforcement of security interest, replevin, or quantum meruit, as applicable. These other causes of action are not covered by the bond and litigation as those counts would proceed as they normally do.

A petition for bond substitution can also be filed in a pending foreclosure action but must be done so within five months of the suit commencement.

However, the bill is unclear as to what happens when there multiple claimants in a single law suit and if some claims are bonded over and others are not. It also unclear as to what happens with blanket liens or liens against multiple parcels such as condominiums if one unit or lot owner bonds over his portion of the lien claim and another unit or lot owner does not.  If some parcels or some liens are protected by a bond and others are not in a foreclosure action, this could result in even more complicated and expensive litigation because property owners would then have to defend against both lien claims as well as any bond claims.

Advantages and Disadvantages

On the plus side, Section 38.1 will streamline litigation. There will be less parties which will save on court costs, service fees, and attorneys fees. Normally, in an action to enforce a mechanics lien claim, the lien claimant is required to name and serve all of the parties in the chain of contract between him or her and the owner plus anyone else with an interest in the property such as a lender, unknown owners and non-record claimants. With a bond in place, the only parties would be the principal and surety on the bond as well as the party the contractor had its agreement with.

This new provision also provides for an award of mandatory attorneys fees which adds liability to the general contractor or owner which did not previously exist.  If a lien claimant recovers at least 75% of its lien claim, it is gentled to recover its attorneys fees incurred. On the other hand, the owner is entitled to its attorneys fees if the claimant recovers less than 25% of its lien claim. This is a big change from Section 17 of the Illinois Mechanics Lien Act (770 ILCs 60/17) which provides for attorneys fees against the original owner (and no one else!) who fails to pay “without any just cause or right”. Section 17 also requires privity between the owner and contractor; Section 38.1 does not.  This change is a huge benefit for subcontractors and material suppliers.

Another major advantage is that there will be money to pay the claim.  Sometimes contractors go out of business or real estate ends up over-encumbered or “under water” by other loans leaving nothing to pay a subcontractor for his or her hard work. With a bond in place, the lien claimant should generally not have to worry about a judgment not being collectible.

A major disadvantage of this new provision is that it can reduce leverage for subcontractors and material suppliers because the threat and pressure of foreclosure would be diminished. However, filing a petition and purchasing a bond has its costs and some owners might still not bother to proceed.   Some owners or developers may also not want to automatically accept liability for any attorneys’ fees incurred by the lien claimant especially if the defenses for non-payment are weak.

The Illinois Mechanics Lien Act still provides a valuable method of recovery for unpaid subcontractors and material suppliers and should still be an important part of an overall collection plan and strategy. A bond still has its advantages as described above. However, in order for an owner to even consider a bond, the claimant still needs to have a valid and enforceable mechanics lien claim against the real estate at issue.

Public Projects

Section 38.1 only applies to private construction projects such as homes, office buildings, stores, condominiums, apartments, factories, etc. This amendment does not apply to public construction projects such as public schools, airports, city parts and municipal buildings.  Section 23 of the Illinois Mechanics Lien Act (770 ILCs 60/23) as well as the Illinois Public Construction Bond Act (30 ILCS 550/1 et seq.) remain unaffected by this new section.

Conclusion

This law goes into effect January 1, 2016 and it remains to be seen if property owners and developers will take immediately advantage of it and how the courts will eventually interpret it. In future articles, we will review the actual procedure on how to file the petition (and objection) to substitute a bond for an Illinois mechanics lien claim.

A complete copy of the new law can be found here:

http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=099-0178

I welcome any thoughts or discussion on it.

By:  Mark B. Grzymala, President and Founder

Grzymala Law Offices, P.C. 

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