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IL Mechanics Lien

IllinoisRecovery Options

American Industrial Werks was contracted to disassemble and reassemble a clean room in IL. The customer transported the equipment once it was packed and stored it in a location in IL. The warehouse was next door to the location that it would be rebuilt. AIW rebuilt the clean room at the new location but pieces of the room ended up missing. AIW never had control of the inventory. AIW's contract specifically stated that we would not be responsible for any missing pieces which the client signed. During the rebuilding process some of the plexiglass broke (as used plexi- glass can become brittle if not stored properly). AIW gave a credit to replace broken plexi-glass. However the client has been holding back $55K of payment because they do not wish to pay because they are missing $1500 worth of gaskets. We have already credited items that we do not believe we were responsible for (pieces that arrived broken from the warehouse) but wanted to move the payment process along as the client prolonged the job and final inspections to delay payment. I have signed estimates with terms listed clearly on the documents. The payment was to be paid upon completion. This job began in October and experienced multiple delays and the customer's key people being out of town to avoid final inspections to record completion. This multiple phase job was finished on Jan 11, 2019.

1 reply

Jan 25, 2019
I'm sorry to hear about all that. It's incredibly frustrating when the other side of a contract won't keep up their end of the bargain, especially when the issue at hand is someone else's fault. Let's take a look at tools that contractors use to recover payment on their projects. First, mechanics liens are probably the most powerful tool to recover payment when property has been improved but not paid for. You can learn more about the Illinois lien and notice rules here: Illinois Mechanics Lien & Notice FAQs. But generally - when a permanent improvement has been made to property and payment isn't made, the party performing the work to improve the property will be entitled to file a mechanics lien. As mentioned above, mechanics liens are strong remedy (and you can learn why that is, here). But because mechanics liens are so powerful, mere threats to make a lien claim can be great for compelling payment, too. By sending a formal notice that a lien will be filed - like a Notice of Intent to Lien - a claimant can show the property owner that they're serious about getting paid. Often, this can lead to payment without the actual need for a lien filing. What's more, in Illinois, sending a Notice of Intent to Lien is a mandatory part of the mechanics lien process. So, if a lien will ultimately be filed, making this "threat" of lien will be necessary anyway. Outside of the mechanics lien laws - there are some other tools for recovery available. For one, Illinois, like many other states, has laws that mandate the timeframe during which payment must be made - the Illinois Prompt Payment laws. When payments aren't made according to the Illinois prompt payment laws, interest begins to accrue on the unpaid debt. Other options for recovery might under breach of contract or unjust enrichment. These are only a few available options, but they are ones commonly used to recover construction payments. But just like with liens, it's worth noting that the mere threat of taking these actions could be enough to compel payment - and sending a demand letter that threatens specific legal action is often a sound step to take prior to actually filing suit. While all of the above may help to recover payment, if possible, resolving the dispute before coming to the threat of lien or legal action is typically preferable.
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