The Illinois Mechanic’s Lien Act allows someone who provides labor or material to the improvement of private property to attach a lien to the property if he or she is not paid for the labor or materials provided. This is an especially useful tool for subcontractors and material providers who do not have a contract with the owner of the property. Without a mechanic’s lien, a subcontractor or material supplier who did not contract with the owner is limited to an action against the party it contracted with – usually the general contractor or another subcontractor. But, a mechanic’s lien makes the owner of the property responsible for paying.
The statutory procedures laid out in the Mechanic’s Lien Act must be strictly followed, otherwise the lien may be invalid. The lienholder must record its claim for lien with the Recorder of Deeds in the county where the property is located within four months of the last day of providing labor or materials for the property. In addition, the lienholder must file suit within two years of the last day of supplying labor or materials to the property. If the lienholder fails to record its claim for lien within the four month period, it may still enforce its lien claim against the owner. However, the lien claim would not take priority over other parties with an interest in the property, such as mortgagees and other lienholders.
Subcontractors and material suppliers that do not have a direct contractual relationship with the property owner must serve the owner and owner’s lender with a 60 day notice of its intent to lien the property if the property is a single-family occupied home, and must supply the owner and the owner’s lender with a 90 day notice on all other types of property, before it can record its claim for lien.
Once a claim for lien has been recorded against the property, and during the period that the lien is valid, the property owner typically cannot sell or refinance the property. The owner may even be pressured by its mortgagee to pay the lien claim because a properly recorded lien claim dates back to the date of the contractor’s contract with the owner. Therefore, it is possible that the mechanic’s lien may have priority over the mortgage if the contractor contracted with the owner for the construction of improvements prior to the date on which the mortgagee recorded its lien against the property. In addition, a mechanic’s lien may take priority over the mortgage to the extent the labor or materials supplied by the lienholder enhance the value of the property beyond the value of the property at the time the mortgage was recorded. For these reasons, most mortgages contain clauses which provide that the property owner is in default under the mortgage if a mechanic’s lien is ever recorded against the property unless the owner provides the mortgagee with protection from the lien claim.
It is crucial that contractors, material suppliers and property owners understand the proper procedure for perfecting a mechanic’s lien in order for the lien to be valid and enforceable. To speak with one of our experienced construction litigation attorneys, call us at (630) 560-1123 or visit our website at https://www.dgllc.net
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Click here to view the text of the Illinois Mechanic’s Lien Act.
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