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Lien time question

IllinoisLien Deadlines

Hi there, We have a Subway store we did some work at in Chicago, Illinois. We completed on 9/30/2019 and invoiced on 11/12/2019. We went back to do warranty work on 2/4/20. This customer still has not paid us and is asking for a 120 day extension on payment. I have a few questions: 1. Is warranty work considered last lienable work or would we use the 9/30/2019 date? 2. If we extend the payment terms another 120 days what should we do to protect ourselves? Would drawing up another contract make the lien start date renew? We want to make sure we are protected within the file-able dates.

1 reply

Apr 6, 2020
It's common for a customer to request extended payment terms. And, depending on the situation, that might work out well for everyone involved. Levelset discusses options for working with a customer to avoid a lien claim here: Don’t Want to File a Mechanics Lien? Here Are 5 Other Options. Notably, agreeing to extended payment terms or drawing up a second contract won't extend the deadline to file a lien.

The Illinois mechanics lien deadline can be generous

In Illinois, that deadline is generally 4 months after project completion. However, liens filed up to 2 years after the project will still be effective as long as the property isn't sold, mortgaged, transferred, etc. Certainly, it's best practice to file within the 4-month period. But, if there's some other payment security in place, and if the property won't be sold, mortgaged, transferred, etc. - then using the 2-year deadline may be acceptable. Security ike a secured promissory note, a personal guaranty, etc. could be negotiated into an agreement to extend payment terms - and that should ease a lot of concerns. Plus, if interest will be included in the deal, that might actually work out in the claimant's favor. Regarding warranty work - generally, minor warranty, repair, or punch list work won't extend the deadline for filing a mechanics lien. But, as discussed above, the Illinois deadlines can be pretty friendly - plus it's possible to enter into a voluntary security agreement with the owner. For more information on Illinois mechanics liens: Illinois Mechanics Lien Guide and FAQs.
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