Mechanics Liens: What you don’t know can hurt you
In most aspects of law, mistakes can be made and fixed. However, if you are a contractor or subcontractor, an individual buying a recently renovated or new construction home, or a corporation who is having work performed on your property, it is important to understand that Mechanics Liens are a different animal.
What is a Mechanics Lien? In short, it is a method by which a contractor or subcontractor can place a lien on a property if they have not been paid for the work performed or materials provided. The law within Illinois on Mechanics Liens is statutory in nature and strictly construed. A statute that is strictly construed must be followed exactly.
What does that mean for you?
The steps that must be taken to perfect a Mechanics Lien depend on the form of the lien being sought, the parties involved (contractor vs. subcontractor), the type of work (public or private construction), and whom the lien is against (owner, lender or third party).
For example, any subcontractor who is working a private construction project must provide notice of the lien claim within 90 days of the last date the subcontractor performed work or delivered material to the project. This form of notice must be done in a very specific way, and any variance will defeat a party’s lien claim. For instance, sending a notice of a Mechanics Lien claim via regular mail is a fatal error. Notice under these circumstances must be delivered via certified or registered mail with return receipt requested and delivery limited to addressee only, to the owner of record or via personal service (see 770 ILCS 60/24 for more details.) Similarly, the lien must be recorded within a prescribed period of time, and generally must be recorded within four months of the last date worked. A failure to record within the prescribed period of time is again fatal to a Mechanics Lien claim. If performed correctly, the Mechanics Lien dates back to the date of the contract between the owner and the contractor so that the contractor has priority over those who purchase the property after the contract.
What does this mean for a homebuyer or investor? Legally, the lien dates back to the time of the contract and that lien will take precedence over a later purchase. In layman’s terms, you need to be certain all contractors and subcontractors have been paid prior to purchase. Otherwise, you will be responsible for to pay outstanding balances even if you did not know they existed. Normally a lien will appear on a title check, but if the home has undergone recent construction, this is a danger to be aware of.
Mechanics Liens are an integral tool in Illinois construction law. However, the statutory guidelines are often overlooked and errors in the perfection of Mechanics Liens are frequently discovered after it is too late. If you have any questions regarding your Mechanics Lien rights or other construction law, please contact our litigation team at Grogan, Hesse and Uditsky.
