Getting Paid . . . Mechanic’s Liens
No matter how careful you may be, there will come a time when you are not paid for your work. And while it is all well and good to talk about taking the owner to court, the cost and uncertainty of litigation may lead to just walking away from a bad debt. Most people will tell you – suing doesn’t always work.
Everyone knows the phrase “mechanic’s lien” without necessarily understanding what it means. In the law there are two things that are similar to a mechanic’s lien. More than anything else, a mechanic’s lien is like a mortgage. A mechanic’s lien generally has priority over other types of liens placed on real property.
Mechanic’s liens are also oddly like copyrights. Why? Because if you perform work – construction, supply, even demolition – you automatically create a mechanic’s lien. Very much like copyright, you can lose your valuable lien if you do not take steps to protect it.
So consider this – every time you perform work, you automatically get what amounts to a mortgage on the property. How many owners want a mortgage on their property? This page will show you how the Illinois Mechanic’s Lien Act works, and how you can use it to get paid.
Who Can Claim a Lien?
In Illinois, mechanic’s liens are available to those contractors, subcontractors, and suppliers who work in the construction field in a manner that improves or benefits a specific piece of land. They can include architects and engineers if they are specifically involved in the project.
Under the Act, contractors and subcontractors are treated differently. A contractor is any party that deals directly with the owner, either via contract or through the owner’s express permission. A subcontractor is any party that deals exclusively with a contractor. Subcontractors can also contract with other subcontractors.
How Do Mechanics Secure Themselves?
If you qualify for protection under the Illinois Mechanic’s Lien Act, there are several steps you must take in order to protect your ability to receive payment for your work.
If you are a contractor, you must file your lien within four months of the last day of your work on the property. This can be done by recording your lien with the office of the recorder of the county in which the property is located.
The filing should include a brief statement of your contract, the balance due to you, and a description of the lot on which you have worked.
If you are a subcontractor, the notice deadline is a strict 90 days, rather than 120.Subcontractors must also give notice to the resident of the property within 60 days from the day they start work on the property. This notice must include your name and address, the date which you began work, the type of work done or to be done, and the name of the contractor you are working under. Pursuant to the Act, subcontractors must give notice of their right to file a mechanic’s lien to the client in the event of nonpayment.
Once you have completed these steps, you have perfected your lien against the property. This means that if you are competing with other creditors to recover what you are owed, your claim will have first priority against other claims that were perfected after yours and all claims that are unperfected. Your claim can still be behind other claims perfected before yours.
How Do You Enforce Your Claim?
To enforce your lien, you must file suit within two years of the last day you worked on the project. In some cases, other contractors who hold liens against the property may file suit. If this occurs, you may receive a demand made pursuant to the Act. If you receive a demand, you must file your claim within 30 days to enforce your lien or risk losing it.
What Else Do You Need to Know?
When considering how to handle making a delinquent client pay, understand that the threat of filing of making a claim on a lien will often encourage the delinquent owner to pay you what you are owed. While you cannot use the Mechanic’s Lien Act to bully an owner, you can use it to keep the owner from bullying you.
Many contractors handle mechanic’s liens on their own and do a good job. For others, though, the remarkably technical Act can lead to a disaster. There are no excuses allowed for failures to comply with the strict rules of the Act. Illinois law also does not permit a business to represent itself in court, should it be necessary to file a foreclosure suit. For all these reasons, it is important to talk to an experienced attorney before deciding whether to do this on your own or to have an attorney file and pursue your claim.
If you need to enforce or file a Mechanic’s Lien in and around Chicago, contact the Rob Cohen Law Office for a free consultation. He has decades of experience enforcing the rights of contractors throughout Northern Illinois. You may be surprised to find out that you can afford to have an attorney on your side.