Illinois Mechanics Liens
The Mechanics Lien Process - An overview of the process.
Identifies the various entities and situations which are affected
by the Mechanics Lien Act.
What is a Mechanics Lien?
The Mechanics Lien Act - The "Secret Gotcha!"
The Mechanics Lien Act Has Broad Application
Contractor or Sub?
The Mechanics Lien Process
WHAT IS A MECHANICS LIEN?
The basic concept of the Illinois Mechanics Lien Act is that
if an owner of land in Illinois hires a contractor to build or
repair a building on the land, and then the owner refuses to
pay the contractor, the contractor can sell the land and the
building, and take the amount owed plus attorneys' fees and costs
of suit out of the sales price.
Also, far more people are affected by the Act than the above
paragraph would suggest, and even if the involuntary sale of
someone's home does not sound harsh enough, consider the following:
Property Owners: In some circumstances, the property
owner can be forced to pay the contractor twice. Payment
without following the process in the Mechanics Lien Act doesn't
"count" as a legitimate payment. Bankruptcy can't save
you either - a mechanics lien is a "secured debt" and
so gets paid first in priority out of the sale of the real estate.
The property owner must properly complete the paperwork and follow
the procedures in the Act to avoid being stuck with paying twice
or losing the property.
Mortgage Lenders: A mechanics lien generally has
priority over a prerecorded mortgage. Unlike almost everywhere
else in the United States, Illinois property law creates an exception
to the "first in time" rule that automatically defeats
most other liens and mortgages in the Mechanics Lien Act. An
Illinois mechanics lien even has priority over your mortgage
in bankruptcy. However, the Act itself does provide means to
decrease the value of the lien or to eliminate it entirely.
Contractors, Subs, and Suppliers: Despite the above
descriptions of how powerful a mechanics lien can be against
an owner who refuses to pay, mechanics liens are tricky and fragile.
The paperwork for the job (contract, change orders, waivers,
etc.) can easily damage or eliminate your lien rights, and sometimes
the lien is the only way to get paid. Also, a contractor that
handles money in a manner prohibited by the Act can be sued and
even convicted of several crimes. What information is entered
into the various forms, as well as which form to use and when,
should be done carefully to protect these rights.
THE MECHANICS LIEN ACT - THE SECRET GOTCHA!
Clearly this paragraph is written for property owners and
lenders who may not be familiar with mechanics liens. It would
be a very unusual contractor or sub in Illinois that did not
have at least a fundamental familiarity with lien waivers and
Chasing a ball into the street does not always lead to being
hit by a car, and ignoring the Mechanics Lien Act does not automatically
result in a lien being filed against the property. However, it
does not follow that the above activities are either a good idea,
or even safe to do. When it comes to the idea of losing title
to your real estate, losing the priority of a mortgage, or not
getting paid for your work, the possibility should be enough
of a concern to justify learning more about what the Act requires.
Many catastrophes are avoided with a little knowledge, like simply
looking both ways before entering the street.
THE ILLINOIS MECHANICS LIEN ACT HAS BROAD APPLICATION
A. Contracts. The Illinois Mechanics Lien Act is automatically
included as a matter of law in every construction contract in
the state of Illinois, even if it is not mentioned anywhere in
the contract, and even if the parties to the contract are not
aware of the existence of the Act. Furthermore, attempts by the
parties to the contract to avoid compliance with the Mechanics
Lien Act by agreement are null and void, and will not be upheld
B. Who is Included. The usual four categories of people
and businesses affected by the Mechanics Lien Act are owners,
lenders, contractors, and subs. However, because of the broad
definitions of each of these according to the Act, it includes
more than would be immediately obvious, such as the following:
- Tenants, Architects, Engineers, and Property Managers:
These categories can hold unusual dual capacities under the Act.
On the one hand, they may sometimes form contracts that affect
the owner's title and the mortgage. But they can also be contractors
who are themselves entitled to file mechanics liens against the
- Condominium Associations: Because the mechanics lien
can lead to the sale of a condo unit, the association will want
to monitor, and perhaps defend or settle the matter, or even
purchase the property in a severe case. Work on the common elements
can lead to a mechanics lien problem, as can work inside a unit.
- Insurance Companies and Mortgage Lenders: Anyone acting
as a construction escrowee or similarly should know and comply
with the fiduciary requirements of the Act. The fiduciary obligations
run both to owners and contractors, and noncompliance has both
civil and criminal consequences.
- Individual Workers: The individual worker is not only
a potential lien claimant, but also holds a superior right over
other lien claimants. Wages for labor are to be paid first, and
the Act provides a procedure by which a dispute or challenge
to wage claims must be filed within ten days after it
C. Varieties of Work: A "contractor" or "subcontractor"
can be, but does not have to be, one of the usual trades. The
Act permits essentially anyone with an agreement for work or
materials at the property to file a lien claim against the property.
The following is only a sample of some valid lien claimants (in
no particular order): carpenter, plumber, welder, truck driver,
bricklayer, crane operator, landscaper, house mover, architect,
structural engineer, professional engineer, lumberyard, concrete
dealer, surveyor, well driller, machine installer, carpet dealer,
carpet installer, sign maker, painter, electrician, property
manager, tenant. This list is intended to show a wide range of
workers and materials dealers - it is not complete or
CONTRACTOR OR SUB?
The procedure for creating a mechanics lien varies, depending
on whether the lien claimant is considered a contractor or subcontractor.
The words "contractor" and "subcontractor"
have precise and unusual definitions under the Act. A contractor
is anyone who has a contract directly with the owner or the owner's
agent. The dollar value of the contract makes no difference.
A multibillion-dollar project design/build agreement is treated
as the same (for this purpose) as an agreement to deliver three
sheets of plywood to a single-family home. If the agreement is
directly with the owner or owner's agent, the other party is
treated as a contractor and must comply with the contractor's
procedure for establishing a lien.
On the other hand, everyone else is a subcontractor. That
is, if the agreement for the work or materials is with someone
other than the owner or the owner's agent, then the procedure
in the Act for subcontractors must be followed. There is no special
designation for "subsubs" or those farther down the
chain; for purposes of the Mechanics Lien Act, they are all referred
to as "subcontractors" and must follow the subcontractor's
The classic example of this would be that the owner hires
a general contractor, which in turn parcels out the work to a
roofing sub, an electrical sub, a masonry sub, and so on. In
that case, each of the entities fits into a clear role under
The question of who is a contractor and who is a subcontractor
can become somewhat tricky when the transaction is more complex.
If the work on the property is permitted under a lease, and the
tenant hires an architect, who in turn selects the general contractor,
who then picks the various subs, it can be unclear precisely
where "owner" stops and "contractor" begins.
Is the tenant an "agent of the owner?" How about the
architect? Further, in the very common event that corporations
are the parties to the contract, a question of proper authority
to enter into the contract may confuse the issues and even invalidate
the contract. If possible, this matter should be clarified in
a written contract with the owner. However, there is no simple
answer when questions of this nature arise; if the classification
of the parties is being disputed, the matter should immediately
be referred to an attorney for careful investigation.