By: Tina Paries
Most contractors have faced the problem of not getting paid on a project. One remedy for that problem is to assert a mechanics lien claim. Illinois has its own Mechanics Lien Act – 770 ILCS 60/1 – which sets forth the requirements for asserting such liens and can be accessed online. Note that the requirements in the Act are not loose guidelines. They are in fact requirements. Thus, the failure to adhere to any one of them could mean your mechanics lien claim will be deemed to be invalid.
Who: Before you consider asserting a lien against any project, you need to first determine whether that project is private or public. This is an important distinction and, as you will see below, the requirements for each type of lien are very different. Once you make this determination, you must then identify who you are under the Act. In other words, do you fall within the definition of a “contractor” or a “subcontractor.” The general rule of thumb is that if you have a contract directly with the owner of a project, you are a “contractor” and if you have a contract with anyone other than the owner, you are likely a “subcontractor.”
What: What you do next depends on the type of project and who you are under the Act. If you are a “contractor” on a private project, you need only prepare a mechanics lien claim. If you are a “subcontractor” on a private project, you are required to prepare a mechanics lien claim as well as a 90-day notice.
Both the mechanics lien claim and the 90-day notice should identify the party with whom you contracted, a description of the contract, a description of the property, the date on which you last performed work, and the amount due and owing. The mechanics lien claim must also be verified by an affidavit.
If you are a “contractor” on a public project, you do not have the right to assert a mechanics lien claim. However, if you are a “subcontractor” on a public project, you need only prepare a notice of mechanics lien claim identifying your contract, describing the work you performed, and stating the amount due and owing. This notice must also be sworn to, or verified by, an affidavit.
When: Once you have prepared the relevant documents identified above, the Act sets forth when you need to record and/or serve those documents. The timing requirements for private projects are based on the date you last performed work at the project (the date of last performance is a term of art that has been extensively litigated – for our purposes you should know that it does not include trivial work).
If you are a “contractor” on a private project, you need only record your mechanics claim within four months of the date of last performance. A “subcontractor” on a private project must also record its mechanics lien claim within four months, but it is required to serve the 90-day notice within 90 days of the date of last performance. All lawsuits seeking to enforce a mechanics’ lien claim on private projects must be brought within two years of the date of last performance.
If you are a “subcontractor” on a public project, there is no timeframe within which to serve your notice of mechanics lien claim (it should, however, be served while funds are still due the contractor). But a lawsuit seeking to enforce the notice of mechanics lien claim must be filed within 90 days of having served that notice.
Where: In all private projects, whether you are a “contractor” or “subcontractor,” you must record your mechanics lien claim with the recorder of deeds in the county where the project is located. If you are a “subcontractor” on a private project, you are required to serve your 90-day notice on the owner of record (or his agent) and to the lender, if known. If you are a “subcontractor” on a public project, you are required to serve your notice of mechanics lien claim to the clerk or secretary of the government entity as well as the contractor. All lawsuits seeking to enforce mechanics liens must be brought in the county were the project is located.
How: When serving either a 90-day notice for a private project or the notice of mechanics lien claim for a public project, both are required to be served personally, or by certified mail, return receipt requested, restricted delivery.
The above describes only the basic requirements in the Act for asserting mechanics lien claims. Not only does the Act contain other requirements, but Illinois courts have interpreted the Act to determine issues involving the definition of “contractor” and “subcontractor,” what constitutes lienable work, and how to allocate a lien amongst different properties. It is therefore important to involve your attorney on the front end to avoid potential deficiencies with respect to your mechanics lien claims.