Christopher B. Burke Engineering, Ltd. v. Heritage Bank of Centrail Illinois (IL)

Summary: The Illinois Supreme Court recognized that an engineering company was entitled to a mechanics lien on property where the company surveyed, drafted and recorded a plat of subdivision, because the services constituted an improvement on the property.

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Christopher B. Burke Engineering, Ltd. v. Heritage Bank of Central Illinois, 2015 IL 118955.


Facts: In April 2008, Burke Engineering entered into an agreement with Glen Harkins to survey a tract of land and draft and record a plat of subdivision on property Harkins was interested in. When Harkins entered into this agreement, the property was actually owned by Carol Schenck. Schenck and Harkins eventually agreed upon a sale of the property in August 2008, concluding six to twelve months of negotiations. The exact schedule of the engineering work is unclear, but it is undisputed by both parties that Burke Engineering began at least some of the work before closing and continued to work afterward.

In February 2009, Harkins stopped all work on the property. Burke Engineering had invoiced Harkins $109,549.69, but received no payment. Burke Engineering then recorded a mechanics lien on the property and filed suit to foreclose on the lien against Harkins, Heritage Bank, which provided the financing for Harkins to purchase the property in exchange for a mortgage interest, and the family that had purchased the one completed home in the subdivision. Burke settled with the family, and Harkins went bankrupt. The remaining issue was the priority of Heritage Bank's mortgage over Burke Engineering's lien.

Heritage Bank filed a motion for discovery judgement, alleging that the mechanics lien did not meet the requirements of section 1 of the Mechanics Lien Act and was invalid. Schenck stated that while she knew Harkins had mentioned he was working with Burke Engineering, she had no knowledge of the substance of the agreement. She further stated that she had not given anyone the authority to act on her behalf, and through documents, she attested that the property was free of improvements for at least six months prior to the sale.

Harkins testified that he never intended to work with Schenck on developing the property, nor was he authorized to act on Schenck’s behalf. However, he testified that Schenck knew he had entered into a contract with an engineer to develop the property and she had not objected to that contract.

The circuit court found that the services Burke Engineering provided did not constitute an improvement as defined in section 1 of the Mechanics Lien Act and that the property owner had not induced or encouraged the work. Therefore, the lien was invalid and the circuit court granted summary judgement in favor of Heritage Bank. The appellate court affirmed.


Holding: Reversed and Remanded. First, the Illinois Supreme Court recognized that Burke Engineering’s services did constitute an improvement under section 1 of the Mechanics Lien Act. 770 ILCS 60/1. The court rejected Heritage Bank’s arguments that; (1) in order for engineers to secure a lien for their work, a physical improvement or calculable increase in property value is required, and (2) that architects or engineers may obtain a lien under section 1 only if the services are related to the raising or lowering of a house on the property, the removal of a house thereto, or the removal of a house or structure therefrom.

The court noted that large tracts of land that are to be subdivided must be surveyed and a plat of subdivision must be recorded before any building, structure, or other improvement can be built upon that property. See Plat Act 765 ILCS 205/1 et seq. Thus, the creation of a plat of a subdivision can be understood as a service performed for the building, repairing, or ornamenting structures and appurtenances on the property. Id.

Second, the court remanded the issue of whether Schenck knowingly permitted Harkins to contract with Burke Engineering to the circuit court to resolve issues of material fact. Heritage Bank maintains that Schenck did not knowingly permit the contract because she did not receive any benefit from the work or induce the work in any way. The court disagreed with the contention that property owners must demonstrate that they have accepted a benefit, and in the court’s view engineers and other similarly situated professionals must only be able to demonstrate that a property owner knowingly permitted a third party to contract.

Heritage Bank also contended that Schenck could not knowingly permit the contract because she did not know the details of the contract and never had an opportunity to object to the agreement. The court noted it was not clear from the record whether Schenck knew the engineering work commenced before the date of closing, whether she knew what Burke Engineering was expected to do under the contract, and whether she had or would have had the opportunity to object to the contract. On remand, if the court finds Schenck knowingly permitted Harkins to enter into a contract regarding her property, than the lien attached when the contract was formed and is senior to Heritage Bank’s mortgage interest. If Schenck did not authorize or knowingly permit Harkins to enter into the contract, than the requirements of section 1 of the Mechanics Lien Act were not met until Harkins became the owner of the property. Thus, no lien could have been created until after Heritage Bank secured its mortgage interest.

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By: ATG Underwriting Department | Posted on: Wed, 03/09/2016 - 1:51pm