A lien is a claim against a property for money owed to the entity filing a lien. Liens give creditors and other organizations the ability to sue for uncollected debt if they want, and work as powerful motivators for debtors. Laws for filing a lien can are different from state to state. In Illinois, filing a lien is a simple process, but one that comes with specific time limits for legal action. The most common type of lien filed is a mechanic's lien, which is filed by a contractor that did work on a property but has not yet received compensation.
When a contractor or subcontractor has not received payment and wants to file a lien, Illinois law requires that the lien be created at a county recorder's office. Once the appropriate paperwork has been filled out, the lien is created. This does not mean the property owner is automatically informed about the lien. If the contractor does not inform the owner of the lien, the owner will not realize the lien exists until it comes up during a transaction or property finance process.
Illinois also has strict time limits for mechanic's liens. First, a contractor can only file for a lien within four months of completing work but not being paid. If this window passes, the contractor cannot create the lien. After the lien is filed, the contractor has two years from the completion of the work to take legal action. If a contractor wants to sue for the debt or foreclosure on the property, he can only begin the process within these two years.
Owners who have a lien filed against them in Illinois also have the ability to demand that the contractor take legal action. If the owner is aware of the lien, she can send a formal request to the contractor to make his intentions clear. Usually, this means the contractor must then either sue for the debt, or remove the lien entirely. This allows the owner to end the lien whether the time limit has been reached or not.
Judgment Liens on Property
A judgment lien is a court-approved lien on a property that allows the contractor to successfully foreclose on a house in order to collect debt. However, in Illinois when a lien leads to a foreclosure, any mortgages on the property are paid off first, according to their importance. After the mortgage, state law allows for an exemption, an amount reserved for the owner up to $15,000 or twice that for a married couple or widow. Only if there is money left after the sale costs have been paid will the lien produce any profit for the organization that filed it.