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How to handle GC threatening Mechanic's Lien without any contract

IllinoisMechanics Lien

A small business owner I went to high school with offered to do some general contracting work for me to remodel my bathroom and kitchen. I gave him and his team approximately 1 full month to do the work while I was out of the state, and after returning it became clear this project would take a while longer. Every two weeks, I was told it would take another two weeks. It ended up taking 5 months in total as the GC routinely did not show up or was working on other projects. During this time, I repeatedly asked for estimates and pricing information to get things done but at the beginning we had discussed a range of total budget costs. As the work was being done, he filled out a spreadsheet and then asked for money. After the end of the 3rd month, what I had allocated to labor costs in my budget had been reached and I told him what I wanted completed before giving him any more money. I also asked for estimates on how much would be needed. After while it became clear to me that he was intending to charge far too much money for everything, based on the feedback of my neighbors, friends, and family. I looked it up online and arrived at the same conclusion. It also became apparent that this contractor was taking advantage of the credit card I had set aside to handle materials purchase, for which I have multiple records of fraudulent charges unrelated to the job and that I did not authorize. I was working from home almost every day to be attentive to their activity, and I can confidently say that no more than an average of 15 hours of labor were accomplished each week. At this point I decided that the best thing to do was to get my money's worth and finish as much as possible before he cut and ran off with all of the money and <50% of the work done. I managed to convince him to have a subcontractor finish more of the work, though the end product is far from finished. It took them another 2 months, but finally I got my key back. After the last day of completed work and the key hand off, the GC started requesting money from me in the form of Chase Quickpay. You see we never had a contract, and he never got any signatures. The best we have is a poorly-formatted, mathematically incorrect excel document with arbitrary values for arbitrary units of work. Based on my own ability to read and categorize the labor, it appears he has charged me somewhere between 200-250% of market prices for similar work. It also turns out his businesses only reviews online are 1-star and describe similar situations to mine. Now his lawyer has sent a letter of intent to file a Mechanic's Lien on my property for the remaining balance. Of the total balance, I have paid around 60% of it and to me that constitutes a value greater than market price already. What should I do?

1 reply

Nov 6, 2019
First, it's worth noting that an Illinois contractor generally doesn't have to have a formal contract in order to file a valid and enforceable mechanics lien in the state. Written, verbal, and even implied contracts can give rise to lien rights - so, as long as there's authorization for work performed, lien rights could arise if there are payment disputes along the way. Granted, the same general rules will apply for lien rights - a mechanics lien can typically only be filed when construction work has been performed on the project property but not been paid for. So, where a contractor has grossly overcharged and is not actually owed additional payment, then their lien claim may end up being invalid and unenforceable. For more info on Illinois mechanics lien laws: Illinois Mechanics Lien Guide and FAQs.

How to fend off threats of a mechanics lien claim

Before getting too far along, here's a resource that might be pretty helpful here: I Just Received a Notice of Intent to Lien – What Should I Do Now? Anyway, an owner has some options in determining how to respond to a lien threat. Note, though, that it's hard to officially or procedurally block a mechanics lien filing before it happens.

Responding to a Notice of Intent to Lien

First, note that unlike some other states, a Notice of Intent to Lien is a required part of the Illinois mechanics lien process. So while a lien threat may seem empty, to some degree, Notices of Intent to Lien carry a little extra weight in Illinois. Still, it may be a good bet for an owner to simply respond to a Notice of Intent to Lien by providing documentation to show that the lien claim would be bogus. If an owner has proof that the contractor has overbilled and acted inconsistently with their contract, then the lien claim wouldn't hold up later on if it's challenged. And, if it's made clear that the lien wouldn't hold up - an owner may be able to prevent the lien filing altogether. Any documentation or communication could be helpful here - like the quote for the work, amounts paid (and receipts thereof), the proposed schedule and actual progress, photographs of the progress of work, etc. Really, any documentation that can show the job has been improperly undertaken and that payment isn't actually owed could be helpful.

Threatening counterclaims

An owner can threaten claims against their contractor, too - it's not a one-way street. So, if an owner has potential counter-claims against their contractor, threatening to make those claims if a lien is filed could help prevent a lien claim, too. Further, note that additional damages can come into play if a lien is fraudulently or otherwise improperly filed, and the lien could be discharged. So, in addition to showing the flaws in the potential lien claim (as discussed above), threatening specific action and damages based on that lien filing could also help persuade a claimant from abandoning their claim.

Threatening to bond off a lien

Property owners are generally entitled to bond off mechanics liens that are filed against their property. Bonding off a lien won't make it disappear (more on that here: Primer on Bonding Off a Mechanics Lien), but it will mean that the claimant will have to file a lawsuit against the bond to try and recover payment. And, when a claimant has a questionable claim (or worse), they might be reluctant to shell out the cost of pursuing a lawsuit.

Bottom line

Mechanics liens have drastic consequences. So, if a mechanics lien claim has been threatened against your property, it's often a good idea to reach out to a local construction attorney. They'll be able to review all relevant documentation, communications and other circumstances and advise how best to proceed in your situation.
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