Illinois Mechanics Lien Overview
Contractors & suppliers have strong lien rights in Illinois. If a contractor or supplier isn’t paid on an Illinois job, they can turn to filing a lien to speed up payment and protect themselves. However, there are specific requirements and rules that must be followed. Here are 5 essential things you need to know about Illinois’s mechanics lien law.
1) There is Some Tension about Who Qualifies to File a Mechanics Lien in Illinois
Both original contractors (contractors in direct contract with the property owner such – as architects, engineers, construction managers, and laborers) and sub-contractors have the right to file a mechanics lien in Illinois. However, there is some controversy about work that qualifies as lien worthy. The general rule states that labor, materials, and services must be “used in” or “attached” to the construction, but the interpretation of this standard is gray. The determination of whether work has attached or been incorporated into the property is made on a case by case basis.
2) The Parties Against Whom the Lien is Effective Depends on When It is Filed
There are two deadlines to file a mechanics lien in Illinois.
For a lien to be effective against all parties (including subsequent purchasers), the deadline is 4 months from the completion of the project. To be effective against the original property owner only, the lien may be filed up to two years after providing service or materials. This deadline is firm, even against court-imposed delays, so make sure to allow an appropriate amount of time in case of a setback.
3) Preliminary Notice Rules Depend on the Project Type
General contractors, or any other party with a direct contract with the property owner, are never required to give preliminary notice in Illinois.
All project participants not in direct contract with the property owner are required to send a Notice of Intent to Lien on all projects within 90 days of the last day that service or materials were provided. Again, the notice should be sent by certified mail with delivery restricted to the addressee only and a return receipt requested. Preliminary notice may also be required.
Sending preliminary notice on time is crucial. In an owner-occupied single-family residence especially, lien rights may be reduced significantly depending on whether or not the owner has made any payments to the prime contractor.
4) Written Notice of Lien Filing is Required After a Lien is Filed by a Prime Contractor
If a prime contractor has provided services or material on an owner-occupied single-family residence, and subsequently filed a lien, that contractor must give the owner written notice of the lien’s filing within 10 days of filing the lien. A notice is considered served when sent or personally delivered. Subcontractors are not required to give notice to the property owner that a lien was filed.
5) Date of Lien’s Attachment Determines Priority
The date of attachment is determined by the date of the contract between the owner and the original contractor. If the lien attached to the property prior to a mortgage, the mechanics lien has priority. On the flip side, a mechanics lien does not have priority over any encumbrance that attached to the property prior to the date of contract between the owner and original contractor.