Understanding Mechanics Liens
Mechanics liens are an important collection tool typically used by subcontractors and suppliers. They are a legal claim against property that has been remodeled or improved and exercised when a contractor is not paid.
What is a mechanics lien?
An Illinois Mechanics Lien is an intangible right in property. A mechanics lien acts as a cloud on the owners’ title and prevents the owner from selling or refinancing the property until the lien claim is resolved. Note that mechanics liens cannot attached to government owned property such as public schools, city parks, or municipal facilities. For those unpaid contractors, they are able to file a lien against the funds owed from the pubic entity to the general contractor pursuant to Section 23 of the Illinois Mechanics Lien Act (770 ILCS 60/23).
What law governs Illinois mechanics liens?
In Illinois, mechanics liens are governed by the Illinois Mechanics Lien Act, 770 ILCS 60/1, et seq.
Who is entitled to file a mechanics lien in Illinois?
Generally, if you are a contractor or material supplier who has furnished labor or materials that were used to improve a property and you have not been paid, you may be entitled to file a mechanics lien clam against the property you worked on.
What is the difference between a general contractor and subcontractor?
For purposes of the Illinois Mechanics Lien Act, a general contractor is one who has a contract with the owner or tenant. Even a plumber can be a general contractor if its agreement is with the owner. A subcontractor is a party who has its contract for improvements to the project with a general contractor.
What are the requirements to file a lien claim?
In order to be able to file a mechanics lien claim, you must have a valid contract for improvements with the owner. You must perform under the contract. The labor or materials you provided must be lienable and were used to improve the real estate. Finally, you must be owed money.
What type of work is lienable?
Generally anything done to permanently improve the property will entitle a contractor to make a lien claim such as electrical work, plumbing, building, excavating, carpentry, HVAC, flooring, and landscaping. Recent changes in the Act now allow liens for rental equipment used in the construction of a project.
What information do I need to know in order to prepare the mechanics lien claim?
You need to review title work to determine the current owner of record, the identities of any other lien claimants or mortgagees, the PIN and legal description of the property you want to lien. You also need to calculate your balance due and determine your last date of furnishing at the project in order to be able to assert a mechanics lien claim. A subcontractor has additional requirements in that it must also serve a notice of its claim for lien.
Can an Illinois mechanics lien claim be extended or renewed?
No it cannot. An Illinois Mechanics Lien must be enforced within two years of the contractor’s last date of work. This deadline cannot be extended or renewed past that time. However, once a lawsuit is filed, the lien remains against the property until the lawsuit is resolved.
Can a homeowner put a lien on a contractor?
A homeowner does not have mechanics lien rights against a contractor. However, if a homeowner filed a lawsuit against a a contractor or subcontractor and succeeds in court, it could have a judgment lien against all real estate owned by the contractor and foreclose upon it.