Illinois Mechanics Lien Law
The Illinois Mechanics Lien Act was created to ensure that a contractor is paid for the work performed on a building project. If a contractor is not paid for the work, he can record a lien on the property. The contractor should document the dates spent working on the project, the services performed and the cost of supplies and labor. The Mechanics Lien Act helps protect contractors, subcontractors, material and equipment suppliers, and laborers.
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60-Day Pre Lien Notice
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The owner is not required to make any payments until the contractor provides him with a sworn statement listing the people working on the project and the work that will be done. A contractor should submit the notice of intention to file a mechanic's lien to the property owner within 60 days of starting work on the project. This notice is only applicable to single family residences occupied by the owner. This notice can be sent out even if there is no delinquency. The notice has to be verified, notarized and sent via certified mail.
90-Day Pre Lien Notice
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If the contractor is working on a commercial property, a notice of intention to file a mechanics lien should be submitted to the property owner within 90 days from the date the contractor last worked on the project. The verified and notarized notice should be sent via certified mail. This notice must be sent to the property owner, the mortgage lenders and the general contractor. The county Recorder of Deeds should have the name and address of the owner and mortgage lenders associated with the property.
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Mechanics Lien
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The lien is created as soon as the contract is signed with the property owner. The mechanics lien should be recorded with the county Recorder of Deeds within four months after the project is completed. The amount of the lien can include the cost of unpaid labor, materials and equipment. The notice of the lien must be verified and notarized. The mechanics lien is only applicable to private projects. A lien cannot be put on any property owned by the government.
Priority of Claim
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The contractor will have preference over the mortgage lender if the mechanics lien attaches to the property before the mortgage loan is recorded. If there are liens recorded by other contractors and subcontractors, none of them would have preference over the other. There would be a pro-rata distribution of funds if the property is sold. The only party that would get priority amongst the group of contractors would be the party that filed a claim for wages.
Lawsuit to Foreclose the Mechanics Lien
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The contractor has to file a lawsuit to foreclose on the property to enforce the lien. The statute of limitations for filing the lawsuit to foreclose is two years from the date the work was completed. The lawsuit must be filed in the court that resides in the same jurisdiction as where the property is located. If the parties agreed that any disputes would be resolved through arbitration, the contractor should still file the lawsuit with the court. The contractor can request to stay the court proceedings. This will stop any further action in the court while the dispute is resolved in arbitration.
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References
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