Mechanic's Liens

P.A. 94-0627 (S.B. 1930): Act amended sections 770 ILCS 60/1, 60/2, 60/3, 60/5, 60/7, 60/11, 60/13, 60/21, 60/21.01, 60/21.02, 60/22, 60/24, 60/25, 60/26, 60/28, 60/30, 60/32, and 60/35; and repealed section 770 ILCS 60/1.1. Effective January 1, 2006.

Public Act 94-0627 (the Act) permits mechanic's liens for the provision of labor, fixtures, apparatus, machinery, forms, and form work in addition to services and material. 770 ILCS 60/2, 60/3, 60/21. The Act modifies the Mechanic's Lien Act to include labor, services, material, fixtures, apparatus, machinery, forms, and form work in the procedures for establishing and enforcing mechanic's liens. See 770 ILCS 60/5, 60/7, 60/21.02, 60/22, and 60/32. For example, the Act expanded the definition of contractor under the Mechanic's Lien Act - a contractor improves lots or land or manages structures under construction on the lot or land (770 ILCS 60/1(a)) - by changing the definition of "improve" to include the provision of labor and services in addition to materials. 770 ILCS 60/1(b). The Act also modified the definition of subcontractor to include any person who provides labor, services, material, fixtures, apparatus, machinery, or forms or form work to a contractor. 770 ILCS 60/21(a).

Furthermore, the Act made changes to the procedures for establishing and enforcing mechanic's liens. First, the Act prohibits the waiver of rights to enforce liens as consideration for a contract or subcontract. 770 ILCS 60/1(d). However, it does not prohibit all lien waivers and permits subordination of liens. Id. A subcontractor must have notice of a lien waiver or subordination agreement between the owner and contractor before entering into a contract with the contractor. 770 ILCS 60/21(b). A lien waiver or lien subordination agreement must be in writing to bind a subcontractor. Id.

Second, for owner-occupied single-family residences, contractors and subcontractors must give the owner or owner's agent information about the persons providing labor, materials, fixtures, apparatus, machinery, or forms or form work. 770 ILCS 60/5(b)(i), 60/21(c). Contractors must notify the owner before the owner makes the first payment for labor, materials, fixtures, apparatus, or machinery. 770 ILCS 60/5(b)(i). If there is more than one owner, the contractor must only give the information to one of the owners to satisfy the requirement. Id. A subcontractor has 60 days after beginning performance to notify the owner and preserve the subcontractor's lien. 770 ILCS 60/21(c). If a subcontractor fails to give timely notice and the owner has made payments or been prejudiced by the delay of notice, the harm to the owner caused by the delay will affect the subcontractor's lien. 770 ILCS 60/5(b)(iii), 60/21(c).

Third, the Act establishes procedures for asserting a lien. 770 ILCS 60/11(a). The pleading must contain a statement of the contract under which the claimant agreed to provide the services or material, the date of the contract, the date of completion of the claimant's performance under the contract or an explanation for a failure to complete, the amount due to the claimant, a description of the property, and any other necessary facts. Id. The necessary parties to a claim for lien are the owner, the contractor, any other parties involved in the contracts, any other parties who could assert mechanic's liens, and any other person with an interest in the property. 770 ILCS 60/11(b). A claimant may join any necessary parties before final judgment. 60/11(f). A claimant may add parties with unrecorded interests in the property as "unknown necessary parties" or as "unknown owners." 770 ILCS 60/11(c). The permissible parties to a claim for lien are any other parties with legal, equitable, or possessory interests in the property. 770 ILCS 60/11(d). The procedures governing service of process and publication of notice for civil actions apply to claims for lien. 770 ILCS 60/11(e). Service by one claimant is sufficient for service by all claimants in the action. Id. The defendant to a claim for lien will answer according the procedures governing other civil actions. 770 ILCS 60/13.

Fourth, the Act changed the notice procedures for the amount due to the subcontractor. 770 ILCS 60/24(a). The Act removes the exception that allowed notice by filing for property registered under the Registered Titles (Torrens) Act. Id. The general notice procedures of Section 24 apply to all properties. Id. Service of the notice of the amount due is not an admission of subcontractor status when the claimant later discovers that it contracted with the owner rather than a contractor. 770 ILCS 60/24(b). When the owner or owner's agent cannot be located, the subcontractor may give notice by filing the amount due within 90 days of completion of performance under the contract. 770 ILCS 60/25(a). If the recorded notice satisfies the requirements of Section 7, it is also a claim for lien. 770 ILCS 60/25(b). Recordation of the notice is not admission of subcontractor status when the claimant later discovers that it contracted with the owner rather than a contractor. 770 ILCS 60/25/(c).

Finally, the Act adjusts the fees and costs that the owner may recover if the contractor or subcontractor fails to provide a written release of the lien. When the amount and filing fee for a recorded lien has been paid, the contractor or subcontractor must provide a release in writing to the owner, lienor, owner's agent or attorney, or any other person with an interest in the property upon written demand. 770 ILCS 60/35(a). If the contractor or subcontractor fails to provide a written release, the contractor or subcontractor may be liable to the owner for $2,500, court costs, and attorneys' fees. Id. The owner must file a civil action to recover these amounts. Id.

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