- Illinois is an UNPAID BALANCE lien state.
- Remote contractors have lien and bond rights in IL.
- Lien rights do no apply to the furnishing of labor, services, material, fixtures, apparatus or machinery, forms or form work for the erection or improvement of a wind energy device by contract with anyone other than the owner of the lot or tract of land, and further provides that no lien exists under the Act with respect to that lot or tract.
- Additional remedies may be available under the state’s Construction Trust Fund statutes.
Notice Speed Bumps
- The contractor must give to the owner and owner must require, before any money is paid to the contractor, a statement in writing, under oath or verified by affidavit, of the names and addresses of all parties furnishing materials and labor and the amount due to each. Failure of contractor to furnish statement has been held not to preclude him from enforcing his lien by suit.
- Failure to notifiy the lender does not defeat lien rights but renders the claim subordinate.
- To preserve a mechanics lien against a lender's interest, the lender must be served with a copy of the 90 day notice. If the lender is not served, then the mechanics lien is automatically inferior to the lender's interest.
- First & last furnishing dates are required on residential notices.
Mechanic’s Lien Speed Bumps
- Subcontractor/materialman must give written notice of a claim to the owner and lender at any time after the contract is entered into, but within 90 days after last furnishing. Then, the subcontractor/materialman must wait 10 days before filing a lien or suit.
- Section 38.1 goes into effect on January 1, 2016, and applies to private projects. This section will allow an owner, other lien claimant, or anyone else with an interest in the real estate to substitute a surety bond for the mechanics lien claim (Bond Petition Action). The Bond Petition Action is initiated by filing a petition with the circuit court clerk asking that a surety bond in an amount equal to 175% of the lien claim substitute for the lien claim. Once the court grants the petition, the lien is discharged and the parties would move forward with a lawsuit against the bond. The Bond Petition Action can be filed in a pending mechanics lien foreclosure proceeding within 5 months of the date the suit commences, or it may be initiated before a foreclosure suit is commenced in a separate proceeding. The surety and the principal on the bond are the necessary parties to a Bond Petition Action as well as others in the contracting chain.
The advantage is that the prevailing lien claimant is assured of being able to collect, because all bonds are with the sureties that are rated A or higher by AM Best and a financial size category of not less than IX. The surety and the principal on the bond are jointly and severally liable to the prevailing lien claimant.
Another advantage is the mandatory attorney fee provision. If the lien claimant recovers at least 75% of its claim, it is entitled to recover its attorney’s fees. If the lien claimant recover 25% or less of its claim, the principal on the bond is entitled to its attorney’s fees.
Kori M. Bazanos
Law Offices of Kori M. Bazanos
Foreclosure Speed Bumps
- Upon written demand of the owner, a person claiming a lien can, within 30 days after such demand is served, be required to commence suit to enforce lien or else lien is forfeited.
Oil & Gas
- Liens exist for any persons who perform labor or furnishes material under contract with owner of land. Liens also exist for any persons who perform for a subcontractor. Lien extends to the whole of the land or leasehold, appurtenances, materials furnished, all oil and gas wells and oil and gas produced and their proceeds; it does not extend to underlying fee or royalty interest. If the claim under contract with owner, must file a lien within four months; if claim under subcontract, within three months. Such lien is created, perfected and enforced in the same manner as mechanic's liens. Any lien which extends to oil or gas or the proceeds of the sale of oil or gas is ineffective against any purchaser or pipeline carrier until written notice of the claim is given.
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