Condominiums and the Illinois Mechanics Lien Act

Condominium associations have reason to be concerned about mechanics liens. After all, condominium declarations usually contain extensive provisions designed to establish certain baseline conduct which should, ideally, preserve the stability and desirability of all the condo units, by ensuring that no one condo owner causes the property to be devalued. When a mechanics lien is filed against even one unit in the condominium, the entire building can suffer a detriment.

Nobody really wins in a foreclosure action. Inevitably, contractors would prefer simply to be paid the amount they believe to be owed without having to file a mechanics lien and foreclose on it. The owner is either dissatisfied with the work, has run out of money, or both, and now has to defend a foreclosure action. And the condominium association, no matter which side they may find more persuasive, suffers a loss of stability in the community, and the inevitable uncertainty which comes with the possible involuntary change of ownership. A mechanics lien filed against multiple units or the entire building can threaten the peaceful enjoyment of the property that every owner wants, in addition to the costs in money, time, and energy that come with defending a lawsuit when a construction project goes bad.

For these reasons, and many others, condominium associations in Illinois should be aware of the legal requirements and procedures established by the Illinois Mechanics Lien Act. As with the other parties involved in the construction process, condominium associations can proactively assist the ownership, individually and collectively, in guiding construction projects to successful ends. These activities not only protect neighboring unit owners from irresponsible contractors, but ultimately also protect other unit owners (and contractors) from irresponsible unit owners. After all, the condominium association has an interest in preventing legal battles, no matter who starts them or why.

As described in greater detail elswhere on this site's LEARN pages, the structure of rights and obligations created by the part of Illinois law called the Mechanics Lien Act rewards those who understand and follow the procedures it establishes. Although they can seem obscure, the result of following the rules from the beginning gives all parties involved in the construction process the information they need to build a cooperative effort toward successful completion. The substance of many construction disputes could have been helped or even prevented entirely by following the procedures outlined in the Illinois Mechanics Lien Act.

To learn more, consider the following two options:

Take advantage of the free presentation your condo board can receive from an attorney with experience in the mechanics lien field. My mission is to educate the public in Illinois about mechanics liens, in order to use the law to prevent disputes before they happen. If you would like to schedule a free presentation to your condo board, please CONTACT me.

And, Click Here to Learn More About the Illinois Mechanics Lien Act

 


The following is a portion of the Illinois Condominium Act which discusses how Mechanics Liens may affect property which is subject to a condominium declaration.

 

(765 ILCS 605/9.1)
Sec. 9.1. (a) Other liens; attachment and satisfaction. Subsequent to the recording of the declaration, no liens of any nature shall be created or arise against any portion of the property except against an individual unit or units. No labor performed or materials furnished with the consent or at the request of a particular unit owner shall be the basis for the filing of a mechanics' lien claim against any other unit. If the performance of the labor or furnishing of the materials is expressly authorized by the board of managers, each unit owner shall be deemed to have expressly authorized it and consented thereto, and shall be liable for the payment of his unit's proportionate share of any due and payable indebtedness as set forth in this Section.
Each mortgage and other lien, including mechanics liens, securing a debt incurred in the development of the land submitted to the provisions of this Act for the sale of units shall be subject to the provisions of this Act, subsequent to the conveyance of a unit to the purchaser.
In the event any lien exists against 2 or more units and the indebtedness secured by such lien is due and payable, the unit owner of any such unit so affected may remove such unit and the undivided interest in the common elements appertaining thereto from such lien by payment of the proportional amount of such indebtedness attributable to such unit. In the event such lien exists against the units or against the property, the amount of such proportional payment shall be computed on the basis of the percentages set forth in the declaration. Upon payment as herein provided, it is the duty of the encumbrancer to execute and deliver to the unit owner a release of such unit and the undivided interest in the common elements appertaining thereto from such lien, except that such proportional payment and release shall not prevent the encumbrancer from proceeding to enforce his rights against any unit or interest with respect to which such lien has not been so paid or released.
The owner of a unit shall not be liable for any claims, damages, or judgments, including but not limited to State or local government fees or fines, entered as a result of any action or inaction of the board of managers of the association other than for mechanics' liens as set forth in this Section. Unit owners other than the developer, members of the board of managers other than the developer or developer representatives, and the association of unit owners shall not be liable for any claims, damages, or judgments, including but not limited to State or local government fees or fines, entered as result of any action or inaction of the developer other than for mechanics' liens as set forth in this Section. Each unit owner's liability for any judgment entered against the board of managers or the association, if any, shall be limited to his proportionate share of the indebtedness as set forth in this Section, whether collection is sought through assessment or otherwise. A unit owner shall be liable for any claim, damage or judgment entered as a result of the use or operation of his unit, or caused by his own conduct. Before conveying a unit, a developer shall record and furnish purchaser releases of all liens affecting that unit and its common element interest which the purchaser does not expressly agree to take subject to or assume, and the developer shall provide a surety bond or substitute collateral for or insurance against liens for which a release is not provided. After conveyance of such unit, no mechanics lien shall be created against such unit or its common element interest by reason of any subsequent contract by the developer to improve or make additions to the property.
Each mortgagee or other lienholder of the unit of a common interest community or of a unit subject to the Condominium Property Act shall provide an address to the unit owners' association at the time the lien or mortgage is recorded at which address such unit owners' association shall send notice to such mortgagee or lienholder of any eminent domain proceeding to which the association thereafter becomes a party. If the mortgagee or lienholder has not provided an address for notice purposes to the association, then such notice shall be sent to all mortgagees or lienholders which are named insureds on the master policy of insurance which exists or may exist on the common interest community or unit subject to the Condominium Property Act.
(b) Board of Managers' standing and capacity.
The board of managers shall have standing and capacity to act in a representative capacity in relation to matters involving the common elements or more than one unit, on behalf of the unit owners, as their interests may appear.
(Source: P.A. 91-616, eff. 8-19-99.)

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Copyright 2002, Thomas J. Westgard