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The Basics of a Mechanics Lien in Illinois
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A lien is a way for a creditor to ensure that they can collect what they are owed. A lien can be filed against a home, land or other real estate, and if done properly, it gives the creditor an interest in that property. The property cannot be sold or refinanced without payment of the lien. The creditor, in order to get paid, can also go to court to force a sale of the property and get paid from the proceeds of that sale.
A mechanics lien is specific to construction or improvement projects, both big and small. An unpaid contractor, subcontractor or supplier of materials can file a mechanics lien. For example, if a homeowner decides to renovate their kitchen, they will contract with a general contractor. That general contractor will then work with subcontractors and suppliers in order to get the job done. Any one of these people can potentially file a lien against the home if they don’t get paid for materials or labor.
It’s important for contractors to be aware of Illinois law on mechanics liens so that they can protect their rights. In order to be valid, a lien must be done correctly. It must be recorded with the Recorder of Deeds in the county where the property is located. The deadline for recording a lien is four months from the date the work was completed.
The rules for a subcontractor are slightly different. A subcontractor has to serve the property owner and their lender with a notice of intent to impose a lien against the property. This extra step exists because a property owner and subcontractor might not have any direct contact. The notice is either a 60-day notice or a 90-day notice, depending on the type of property.
Similarly, Illinois property owners should understand their rights before entering into any contracts for work on their property. Often, a dispute about the how the work was performed or the scope of the job leads to a refusal to pay and a subsequent lien. This emphasizes the importance of a clear agreement between property owner and contractor on the scope of the project, materials to be used, timeline and payment. Property owners should insist on lists of subcontractors to be used, as well as lien waivers once the work has been paid for.
A lien isn’t good for the title of a property. While the lien is valid, it can prevent the resale or refinance of the property. For this reason, the initial notice of intent to lien, or the recording of the lien, will often encourage the property owner to pay what’s owed or come to an agreement on payment. If not, the creditor can take additional steps to enforce the lien.
In order to enforce a lien, the contractor, subcontractor or supplier must file a lawsuit. The deadline to file a lawsuit is two years from the last date work was performed or materials were supplied. A recorded lien is valid for these two years, but a failure to sue within that time frame voids the lien. It will expire, and with it, the right to sue.
Regardless of which side of the lien you are on, there are specific legal requirements to be aware of and certain steps to follow. If you have questions about Illinois mechanics liens, let us know. We will talk to you for free about your situation, and if you need a lawyer, we can recommend someone with significant experience in mechanics liens.