A contractor that doesn’t get paid for doing work on someone’s home or real estate property has a very useful method of enforcing his or her collection rights – the filing and prosecuting of a mechanics lien against that real estate. Mechanics liens are products of state law and, in Illinois, are authorized and governed by Section 770 ILCS 60/1 et seq. of the Illinois Compiled Statutes.
Critical components of a valid mechanics lien claim are:
- A valid contract for improvement to real estate;
- Contractor’s compliance with the contract;
- Actual improvement or added value to the real estate;
- A lien must be able to attach to the work and materials.
If a contractor wishes to enforce a mechanics lien, he or she must prepare and record a lien claim in the office of the County Recorder in the county where the subject real estate is located. This lien claim has very specific requirements for what information it must include, and differs for general contractors versus subcontractors. In addition, the contractor must comply with the strict statutory notice provisions, providing the owner of the property with notice of the lien claim. The process of recording and giving notice of a lien claim is called perfecting the lien.
Once a mechanics lien is perfected, the property owner may be required to satisfy the lien by payment or adjudicate the validity of the lien before the owner will be permitted to sell or refinance the property. However, in many instances, contractors fail to properly perfect their lien claims or they fail to take proper steps to enforce those claims. It is important that you rely on counsel that understands when a mechanics lien might not be enforceable to best protect your rights.
There are many statutory requirements that must be met in order for a contractor to effectively use a mechanics lien as a collection tool. If you are a developer or a seller, or represent one facing a mechanics lien hurdle, Erwin Law can assist in determining whether or not the lien is valid and enforceable. For information, please call James Erwin at 773-525-0153.