With great power comes great responsibility. When talking about mechanics liens (construction’s most powerful tool for payment), this responsibility manifests itself in strict deadlines. Once a lien is filed, the clock starts ticking. If the clock strikes zero and no enforcement action is brought, the lien “expires”. This means that the lien claimant may no longer bring an enforcement action (read: lawsuit) to enforce their lien claim.
But what happens when a lien does expire? The answer to this question varies depending on a number of factors, but it may have just become a little bit easier to remove a mechanics lien in the state of Illinois.
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Removing a Lien That’s Expired
When a lien expires, typically, it just lingers in the property record. Pretty gross, right? That lingering lien can still create headaches despite the fact that it might now be useless. Prospective purchasers are turned off, and mortgagers and lenders will have their questions. “What to do, what to do?” Well, that depends on what’s happened with the lien. Let’s take a look at a few different types of expired liens.
Claimants who have filed a lien claim and gotten paid (or have otherwise agreed to release their liens) should release their lien. We explain that idea in the post linked below, but it’s just that simple. There’s no need to let a lien linger when it’s been satisfied.
Expired liens are trickier. Typically, they exist because a lien claimant has forgotten to enforce their lien claim. Of course, that does not necessarily mean the claim has been satisfied. When a lien claim hasn’t been paid, you’ll have a hard time convincing that claimant they should release their lien. Instead, they’d usually rather it just sit there and cause a little trouble. (Again, read the post linked above for a more in-depth discussion of this topic.)
Now, some states require that an expired lien must be removed, and others claim the lien is automatically dissolved. But on the whole, expired and unenforceable lien claims just sit in the property records causing minor headaches or even major migraines. To get these liens removed, an owner might demand removal. Or they could file suit to have the lien discharged. But this can get expensive, fast.
Is that fair? Probably not. Luckily, it sounds like one state is ready to do something about it.
Removing a Lien in Illinois May Become Easier
Enter: Illinois. (There’s also a great article on this topic at the Cook County Recorder’s site.)
Both the Illinois House and Senate have passed HB 5201 which would address the issue of lingering, expired liens. The bill was passed along to the governor in late June, and it still awaits signature. But how exactly would it work? Let’s break it down…
The county recorders office would have the authority to determine whether a filed lien has expired. After review by legal staff or counsel, if the recorder determines that the lien has expired, the recorder will issue a “Notice of Expired Mechanics Lien” to the residential property owner where the expired lien is filed.
Then, if the owner confirms that the lien is not involved in current or pending litigation (and if the county records corroborate), the owner may request the recorder send a “Demand to Commence Suit” to the lien holder. If the lienholder files an answer or lawsuit within 30 days, the recorder’s job is done.
If no suit or answer is filed within 30 days, then the “referral” process may be started by the recorder. Now the referral process means…
Wait. Does This Sound Too Complicated?
Actually, in my opinion, I do think it sounds a little too complicated. If this bill is signed into law, we’ll write another blog post on it. We might even explore products to support the new lien removal process. But until then – let’s dream of a simpler process.
When a lien has expired, it should either be automatically dissolved, or an owner should be able to remove the lien without an extensive, drawn-out process. Something as simple as a mere filing by the property owner (with notice to the lienor) should be possible to discharge a lien. After all – a mere filing established the lien in the first place!
Illinois is Moving in the Right Direction
Ok. That last section above might be a pipe dream (or a fever dream, depending on your perspective). But Illinois is moving in the right direction! They’re at least trying to solve the problem at hand. While I might not be in love with HB 5201, I can certainly appreciate the fact that it would be cheaper and easier than removing a lien via legal action.