Imagine that your family bought a suburban home outside of Evanston last year. After moving in, you decided to renovate the master bathroom. You hired a contractor to replace the tiles, sink, shower, and vanity for a lump-sum of $10,000. You signed the contract, and were happy to see the work move along quickly.
Within a couple months, the work is complete and you're enjoying your renovated new bathroom. But your contractor indicates that the job cost $2,000 more than he expected. Over your objections, he sends you an invoice for the extra amount. You refuse to pay, arguing that the sum is beyond the contract price. Once day, you arrive home to find a certified letter waiting in your mailbox: your contractor has filed a mechanic’s lien for $2,000. What is this document, and what can you do about it under Illinois law?
Most Illinois homeowners have likely never seen or heard of a “mechanic’s lien.” What exactly is this document, and what does it mean for you?
A lien is publicly filed in the Illinois county clerk’s office in the county in which the property is located. (In other words, the contractor would file the lien in the county where your home is—not necessarily the county where his or her business is located). A lien becomes a cloud on a homeowner’s title, meaning that the title is subject to the contractor’s stated financial interest in it.
In practical terms, if the contractor puts a lien on your home in the amount of $2,000, anyone who buys your property would buy it subject to owing the contractor that $2,000. This will make it difficult for you to sell the property (or to refinance it through a bank or other institutional lender), since no one would want to take property that is subject to this claim. Contractors therefore use liens as a means of incentivizing property owners to settle with them in order to get them to clear the title.
You may wonder what a lien looks like, if a contractor has threatened to file one. Although there is no single required form in Illinois, you can find model forms pretty easily online, or by asking a local construction attorney.
Basically, the short form will list your name and contact information, the contractor’s name and contact information, the name of any general contractor involved (if a subcontractor or supplier is filing the lien), the amount of money allegedly due to the lienor, and a description of the lienor’s labor or materials provided to the property.
Most contractors do not simply file a lien on your property out of nowhere. They ordinarily start by making repeated requests for payment, which the homeowner either ignored or rejected. The best way to fight a lien filing is to avoid the lien altogether!
How can you do this? Simply put, it requires you to negotiate with a contractor prior to the filing. If your contractor asserts that he is owed an extra sum of money, do not just ignore the phone calls or invoices. This might be viewed as a sign of disrespect, as well as a sign that you have no intention of paying a dime. While you might think that this “strong signal” will convince your contractor to simply go away, the contractor is just as likely to dig in his heels and cause legal trouble for you, either through a lien or a lawsuit (or both).
You and the contractor may have a good faith disagreement about whether certain work was part of his contract, or about the quality of that work. Rather than ignoring the issue, have a frank discussion about it, or consider going to mediation.
In mediation, a third-party neutral (often an attorney or individual with experience in the construction industry) can help you and your contractor negotiate a fair settlement. In both negotiation and mediation, you should be open to clever settlement strategies. Rather than paying a lump-sum of money, perhaps payments could be made over time. Rather than a monetary settlement, maybe you could offer the contractor a public endorsement or reference. Rather than fighting in court, you could offer the contractor discounted payment in exchange for a limited scope of ongoing work. The creative possibilities are endless.
In short, there are certainly legal remedies available to fight a lien once it is filed. However, you are likely to save both time and money—as well as aggravation—if you find a way to settle the payment dispute with the contractor. This does not mean you need to give into all of the contractor’s demands, but it does mean that you should keep in mind the costs of legal action if the contractor files a lien. It is likely in both your and the contractor’s interest for the payment dispute to be resolved quickly, without the need for attorneys.
In Illinois, a statute known as the Illinois Mechanic’s Lien Act controls the requirements for liens. You can read the full law at 770 I.L.C.S. 60, although you will find that the legislative language is somewhat dense. Like with most states’ lien statutes, Illinois’s lien law contains many rules and exceptions, depending on the type of property involved and the work performed.
Generally, you should know that Illinois permits many different entities to file a lien on your home. A proper lienor is defined as “Any person who shall by any contract or contracts, express or implied… with the owner of a lot or tract of land, or with one whom the owner has authorized or knowingly permitted to contract, to improve the lot or tract of land or for the purpose of improving the tract of land, or to manage a structure under construction thereon.”
This language is a bit complex, but essentially, anyone who has an agreement to improve property with you directly, or an agreement with another contractor that has such an agreement with you, can file a lien if he or she is left unpaid. This commonly includes contractors, subcontractors, and material suppliers.
As discussed above, a mechanic’s lien can create problems for Illinois homeowners. There are several strategies to get the lien removed. The first, as mentioned, is to negotiate a resolution with your contractor. There are a couple other options.
A second option is to obtain what is known as a “lien bond” through a surety company. The bond essentially guarantees payment to the contractor in the amount of the lien, if the contractor is successful on his or her legal claims, but also removes the lien from your property record.
Third, you can petition a court (specifically, the Illinois Circuit Court in your county) to remove the lien. Your grounds for removing the lien could include that the contractor never did the work that the lien claims, or that the work was already compensated.
You can also attack legal deficiencies in the contractor’s lien. One of the single most common legal deficiencies in an Illinois lien is that it is filed too late. Under 770 I.L.C.S. 60.7, contractors have only four months from the date on which they last provided labor or services on the property. In many cases, contractors, subcontractors, and suppliers are simply not prepared to file the lien – either because they hope to still negotiate payment, or because they may have forgotten to mark the deadline. Consequently, you should be conscious of the contractor’s “last date.”
Moreover, a lien filer only has two years within the date of the lien filing to “foreclose” or enforce the lien through a lawsuit. If they fail to do so—by filing a lawsuit against you—then the lien effectively expires. Illinois courts tend to enforce these deadlines firmly.
If the lien filing is untimely, you can petition for the lien to be stricken from the property docket. Indeed, the lienor is required to notify the clerk and file a “release” of the lien if these deadlines are not met (or if you and the contractor voluntarily settle the dispute).
According to 770 I.L.C.S. 60.35, the lienor must “acknowledge satisfaction or release thereof, in writing, on written demand of the owner… and [if the lienors] to do so for 10 days after such written demand he or she shall be liable to the owner for the sum of $2,500, which may be recovered in a civil action together with the costs and the reasonable attorney’s fees of the owner….”
In other words, if the lienor fails to release his lien as the statute requires, he could end up paying your attorneys fees and a $2,500 penalty.
Do not panic when you are served with a lien. Remember that very few contractors are excited about the idea of prolonged, expensive litigation. Most would be more than happy to enter into reasonable settlement negotiations with you regarding the amount owed. To the extent that the contractor refuses to negotiate, Illinois law gives you a number of legal tools with which to remove the lien from your property record.