Who is entitled to file an Illinois Mechanics Lien Claim?

Illinois mechanics lien claim claimants

This is our second post in our series providing an overview of Illinois mechanics liens. In this installment, we will examine what is required in order to be entitled to an Illinois mechanics lien claim and who is entitled to assert one.

In a typical construction project, there is generally an owner, developer or sometimes a tenant who hires a general contractor to perform work on a project. The general contractor then hires subcontractors for specific trade work such as electrical work or carpentry. Often, those subcontractors will also hire sub-subcontractors or material suppliers (for lumber, pipes, etc.) and so on.

For purposes of the Illinois Mechanics Lien Act (the “Lien Act”), a general contractor is one who had a contract directly with the owner, the owner’s agent or someone he or she has “knowingly permitted” to contract for improvements.  This means that even a plumber can be considered a “general contractor” as long as its contract for the work performed is with the owner.  A subcontractor is one who has a contract with a general contractor.  This is an important distinction and the steps needed to assert and perfect your mechanics lien rights can vary on whether you are a general contractor or a subcontractor under the Lien Act.

General contractors, subcontractors and material suppliers who have furnished labor or materials used to improve real estate from the general contractor to the lowest tier subcontractor or material supplier is entitled to a lien claim for his or her unpaid work against that real estate.

In order to be able to assert a mechanics lien claim under Illinois law, a party generally needs to have:

  1. A valid contract with an owner or his agent (such as a general contractor)  for permanent improvement to real estate;
  2. Performance of that contract or excusable non-performance (such as a failure to timely pay);
  3. The work or materials must actually improve or add value to the real estate; and
  4. The work and materials must be lienable.

Some examples of lienable work include: carpentry work including framing, installing flooring and carpeting, installing drywall,  excavation, paving, electrical work, roofing, masonry, installation of HVAC equipment, plumbing including installing storm and sewage drains, furnishing concrete forms, cabling, drilling for well water, rental of cranes and other construction machinery, whole house painting, installation of an elevator and landscaping.

Some examples of non-lienable work include: patching and painting, cleaning, repair work, maintenance, warranty work, and installing non-permanent fixtures such as kitchen appliances and other trade fixtures.

What about public projects? In our last post we touched upon mechanics lien rights for work performed on public projects.   Under Illinois law, a general contractor (one who has a direct contract with the owner or public entity) cannot assert a lien against the public funds pursuant to Section 23 of the Lien Act.  However, a subcontractor who has furnished labor or materials used to improve a public construction project can as long as the same requirements set forth above are met.

This concludes our second installment on Illinois mechanics liens.  Next we will look the steps necessary to take to perfect and enforce your Illinois mechanics lien claim against private projects.

Mark B. Grzymala
mark@grzymalalaw.com

What is an Illinois Mechanics Lien Claim?

House being built

This is the first post in a series aimed to provide a general overview of mechanics liens and related rights under Illinois law.  We will first look at what exactly a lien is, then we will look at who is entitled to file a lien, next we will examine what is required in order to assert a lien claim, then we will review the steps needed to perfect and enforce a lien claim and finally we will touch upon specific issues that occasionally arise that might affect your lien rights.

So what is a mechanics lien? Mechanics liens in Illinois are governed by the Illinois Mechanics Lien Act which can be found at 770 ILCS 60/1, et seq.  A lien is essentially an intangible right in real property. It acts as a cloud on the owners’ title and prevents the owner from selling or refinancing the property until the lien claim is resolved. A mechanics lien claim is recorded in the office of the county recorder of deeds in which the real estate is located in. A mechanics lien claim can provide leverage and security for payment especially when your customer is slow to pay or lacks the funds to do so.  The deadline to record a mechanics lien is four months after the claimants last date of furnishing. Subcontractors also need to serve an additional notice to the owner within 90 days of their last date of furnishing.

Sometimes title companies will allow a general contractor or even a property owner to provide a bond or other insurance to cover a subcontractor’s lien claim. However, there currently is no mechanism under Illinois law which allows a party to “bond over” a lien claim. The lien claim will always remain and the contractor will always have all rights under the Mechanics Lien Act including  the right to enforce the lien claim and foreclose upon the real estate.

It is important to note that mechanics liens can only be recorded against privately owned projects and not government owned projects such as public schools, city parks, libraries, or other municipal facilities.

However, subcontractors who are unpaid on public projects have different remedies. They are able to file a lien against the funds owed from the public entity to the general contractor pursuant to Section 23 of the Illinois Mechanics Lien Act (770 ILCS 60/23).  This is also commonly referred to as a “trapping lien” and no claim is asserted against the actual real estate.  Upon receipt of the notice of claim, the public entity is required to hold funds claimed to the extent it still has them.  Furthermore, for most public projects, the general contractor is required to provide a payment bond under the Illinois Public Construction Bond Act, 30 ILCS 550/1, et seq. Subcontractors can also assert and enforce claims against these payment bonds togrethet with their claims against the public funds.  Claims against bonds must be submitted within 180 days of the claimant’s last date of furnishing.

Liens against private or public projects have very short deadlines upon which to act and you should consult with an attorney as soon as you are anticipating payment issues from your customer.

This concludes our first installment on mechanics liens. Our next post will define the parties entitled to assert lien claims against private and public projects and the requirements that need to be met in order to do so.

Mark B. Grzymala

mark@grzymalalaw.com

Mechanics Lien Seminar – February 8, 2015 at 12 noon

Road construction

On Sunday February 8, 2015, I will be presenting a seminar on the topic of Contractor Rights and Mechanics Liens.  I plan to cover the following topics:

– What is a Mechanics Lien?
– Construction Contract Issues
– Preparing a Lien and Notices
– Enforcing a Mechanics Lien
– Other ways of getting paid

The seminar starts at 12 noon and will be held in the auditorium at 1135 North Clever in Chicago, Illinois.

This presentation is sponsored by the Polish Immigration Association.  For more information on this organization please visit www.sepchicago.com 

-Mark B. Grzymala

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