Getting paid for construction work in Illinois often requires contractors and suppliers to comply with the state’s preliminary notice requirements. Not only do such notices help secure lien rights; they provide a number of other benefits to project participants. This article will explain everything contractors and suppliers need to know about sending Illinois preliminary notices.
What is an Illinois preliminary notice?
Preliminary notices across the country go by different names; i.e., pre-liens, prelims, notice to owners, a notice of furnishing, etc. All in all, these typically operate in the same fashion. They are documents sent to owners, lenders, or general contractors informing them of a sub or supplier’s participation on a project.
Following the notice requirements carefully will ensure that a contractor’s right to payment is secured in case of non-payment. Failure to comply with every step can either limit the amount of payment that is recoverable or completely extinguish lien rights.
The Illinois mechanics lien law provides for two types of preliminary notice:
- 60-Day Preliminary Notice
- 90-Day Notice of Intent to Lien
Both types of Illinois preliminary notices are available to protect and secure mechanics lien rights in case of payment disputes. This is especially important if others on the same project are sending preliminary notices.
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60-day notice rules & deadlines
60-day notices are used to protect both homeowners and contractors working on residential projects. Such notices advise the homeowner of the contractors and work being done on their property, and constitute a necessary step to securing payment.
Any party that doesn’t contract directly with the owner on single-family, owner-occupied projects must send a 60-day notice. This notice is due within 60 days of first furnishing labor or materials to the project. If this deadline is missed, then the claimant’s lien rights are limited to the unpaid balance to be made to the prime on the original contract.
For example, suppose a sub fails to provide a 60-day notice. Later, the GC neglects to pay the sub $5,000 – but the property owner has already paid the GC $3,000 for that portion of work. Because of the missed notice, the sub only has the right to claim $2,000 (the unpaid balance due to the GC) in a mechanics lien.
Take note: Whether or not the project is “owner-occupied” can tend to get confusing. For example, see what lawyers had to say in response to this contractor’s question: Is a residence considered owner-occupied if the owners are not living there during remodeling?
90-day notice rules & deadlines
90-day notices are not technically required in every situation, but failure to send them can limit the payments secured by a mechanics lien claim. This is because general contractors are required to provide the owner with a “Sworn Statement” before payments are made, including a list of all subs and suppliers and the amount owed to each.
If the Sworn Statement incorrectly lists the sums due to a subcontractor, that sub is only protected to the extent of the amount listed in the Sworn Statement. So, if the GC properly lists the payment amount, then the sub will be protected for the full amount.
However, any mistakes can limit the amount of protection if the sub failed to send a 90-day notice. Or worse, if the contractor fails to identify a particular sub, all lien rights can be lost without that 90-day notice. Don’t be that contractor!
Anyone who has provided labor, services, or materials and didn’t directly contract with the property owner should send a 90-day Notice of Intent to Lien if they don’t receive payment. If a contractor or supplier is working on a single-family, owner-occupied residence, then they should send both a 60-day notice and a 90-day notice.
In Illinois, the deadline to send a Notice of Intent to Lien is 90 days from the claimant’s last day of furnishing labor or materials to the project. Warranty work or punch list items aren’t factored into the “last day of furnishing.”
If this deadline is missed, there may be a chance that the lien rights are still intact. Missing this deadline leaves contractors and suppliers relying on the prime contractor to list the proper amount on their sworn statement.
Information required on Illinois preliminary notices
- Name and address of the claimant
- The first date of furnishing labor or materials to the project
- Description of labor or materials provided or to be provided
- Hiring party
In addition to all of this information, there is also required notice language that should be included, and this must be in 10pt, bold font. The notice should be as follows:
NOTICE TO OWNER
The subcontractor providing this notice has performed work for or delivered material to your home improvement contractor. These services or materials are being used in the improvements to your residence and entitle the subcontractor to file a lien against your residence and entitle the subcontractor to file a lien against your residence if the labor, services, material, fixtures, apparatus or machinery, forms or form work are not paid for by your home improvement contractor. A lien waiver will be provided to your contractor when the subcontractor is paid, and you are urged to request this waiver from your contractor when paying for your home improvements.
The formal requirements for a 90-day Notice of Intent to Lien aren’t too strict, either. The statute states that the form of the notice may be in the same form as the one provided. This is merely an example of what the notice should contain. The requirements for an Illinois 90-Day Notice of Intent to Lien are a bit vague, but the more details added the better.
“To (name of owner): You are hereby notified that I have been employed by (the name of contractor) to (state here what was the contract or what was done, or to be done, or what the claim is for) under his or her contract with you, on your property at (here give a substantial description of the property) and that there was due to me, or is to become due (as the case may be) therefore, the sum of $….”
Both types of Illinois preliminary notices must be sent by certified mail with return receipt requested. Illinois requires an extra layer of security: The law also requires that the notice be sent with restricted delivery to the addressee only.
The notice by certified mail is considered served at the time of its mailing. Otherwise, personal service can be used, and delivery is complete upon actual receipt of the notice. This question has come up a number of times:
- What if the owner avoids receiving a notice of intent sent certified mail, return receipt requested?
- What can I do when a customer refuses to answer the door to sign certified Notice of Intent?
Preliminary notices are an invaluable tool for construction projects. Not only do they open up communication and reveal the full payment chain; but also impact the amount of mechanics lien protection available on Illinois construction projects. No one wants to have to file a lien. However, securing the ability to do so (and for the full amount) can provide useful leverage in case a payment issue arises.