Mechanics liens protect parties that furnish labor and/or material in the improvement of property. While the exact definition of the protected parties varies from state to state, this core statement remains the same. In order to file a valid mechanics lien claim, the labor or material provided by the claimant must be associated in some way with improving a piece of real property. Questions arise when it must be decided whether or not certain work qualifies as improving property, because in the event of a dispute or payment problem, the ability to file a mechanics lien can have a significant impact on whether or not a party eventually gets paid.
Illinois Rule Regarding Ability to Claim Mechanics Lien
Illinois adheres to the general standard that mechanics lien protection is afforded to parties who furnish labor and/or material for the improvement of real property. And, like mentioned above the question of what that actually means is sometimes difficult to determine. As used in the Illinois Mechanics Lien Act, “improve” is defined as:
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furnish labor, services, material, fixtures, apparatus or machinery, forms or form work in the process of construction . . . or fill, sod or excavate such lot or tract of land, or do landscape work thereon or therefor; or raise or lower any house thereon or remove any house thereto, or remove any house or other structure therefrom, or perform any services or incur any expense as an architect, structural engineer, professional engineer, land surveyor or property manager . . . or furnish or perform labor or services as superintendent, time keeper, mechanic, laborer or otherwise, in the building, altering, repairing or ornamenting of the same. . .
This is a lot of words, but is not a very precise definition. Again, the question is what constitutes the “process of construction” or “building, altering, or repairing”?
The Recent Case
A recent decision from an Illinois appellate court provided some insight into this particular question. In Burke Engineering v. Heritage Bank, et al, the court was tasked (as one question) with determining whether work performed by an engineering firm hired to plat undeveloped land for a potential new housing subdivision was an “improvement” giving rise to a mechanics lien right.
In what seems to be a particularly harsh result, the appellate court agreed with the trial court in determining that it did not. In coming to this conclusion, the court relied heavily on previous Illinois cases that set forth the proposition that “[i]n determining whether a mechanic’s lien is valid, a court focuses on whether the work performed actually enhanced the value of land.”
Even though the work . . . was clearly done for the purpose of an improvement in the land’s value, the court determined that it did nothing ti improve the property, and as such, was not entitled to mechanics lien protection. While understandable, this seems to be a very limiting qualification. It’s easy to extend this to absurd results. If a house is modified poorly, or in a manner specific to the owner’s taste, such that it doesn’t improve the actual value of the property, there is little question that work would qualify for mechanics lien protection. Clearly, the actual increase in value of the property due to the work performed is a dangerous line to draw. Indeed, in a dissenting opinion, Judge Lytton referenced a different (and likely better) rule – that the real question should be whether or not the “services were provided for the purpose of improving the property”.
This seems more in line with both the protections supposedly provided by the mechanics lien instrument, and the definition of the parties entitled to a mechanics lien by the statutory language. None of that mattered in any practical sense to the lien claimant in this case, though. even though the work provided in platting the undeveloped land was clearly done for the purpose of an improvement in the land’s value, the court determined that it did nothing to improve the property, and as such, was not entitled to mechanics lien protection.