Can the lien include - loss of value and unpaid insurance claim on damaged equipment
IllinoisOur customer was renting our equipment for work that he was doing as a sub-contractor on a construction site and significantly damaged the rental equipment. Per the rental agreement, the customer is responsible for 1. rent while the equipment is being repaired 2. loss of value of the equipment due to the damages 3. Repair cost to repair the damages. The customer hasn't paid any of these 3 components. Is it proper to include these charges in the lien amount, or do we need to amend the lien to include only one or two of these components.
4 replies
You leased equipment to a subcontractor, and the subcontractor violated the terms of your contract. You ask whether you can include contract damages in your lien claim against the property on which your customer was working. Consider the following:
- First, within 60 days of supplying items in connection with a project on an owner-occupied residence, subcontractors and suppliers must provide notice to the owner.
- Second, if this was not a residential job, you must still perfect your lien claim within 90 days of the last item supplied by sending notice to the owner and filing Notice with the Recorder of Deeds.
- Third, a lien claim may only be for the value added to the underlying property. Most likely, that means the cost of leasing your equipment to the subcontractor. The balance of these charges would most-likely have to be collected from your customer via a breach of contract lawsuit.
- Finally, it is important to remember that the Mechanics Lien Act will be interpreted strictly. If you appear to be over-reaching in your Lien, it may be entirely stricken by a Court.
I hope this information was helpful. Best of luck!
The operative section of the Mechanics Lien Act is 770 ILCS 60/1.2, Rental equipment liens.
In addition to persons who would otherwise have a lien under this Act, any person, whether contractor or subcontractor, who leases construction equipment to another for use in the process of constructing a specific improvement to real estate, has a lien for the rental value of the construction equipment to the same extent and in the same manner as provided in this Act for other liens. This Section shall apply only if, and to the extent that, the equipment is used on or about the site of the improvement. This Section does not apply if the improvement is either a single family residence or a multi-family residence of fewer than 12 units in a single building.
I hope this information was helpful. Best of luck!