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In order for a mechanics lien claim to be valid, the claimant must be defined as contractor or subcontractor as described in the Mechanics Lien Act. In this article, we’ll discuss the various methods for evaluating the validity of a mechanics lien in Illinois. We cover topics such as the proper prerequisites to a mechanics lien, the difference between contractors and subcontractors and the work must have been done to satisfy a lien, information necessary in a mechanics lien, and deadline associated with filing a claim.
In this article, we’ll discuss the various methods for evaluating the validity of a mechanics lien in Illinois. We’ll cover topics such as the proper prerequisites to a mechanics lien, the difference between contractors and subcontractors and the work must have been done to satisfy a lien, information necessary in a mechanics lien, and deadline associated with filing a claim.
Subcontractor Vs. Contractor Mechanics Liens
Have the Prerequisites to the Lien Been Satisfied? The prerequisites for a contractor versus a subcontractor lien differ somewhat, but the basic stipulations are the same.
Is the claimant a contractor or subcontractor?
In order for a mechanics lien claim to be valid, the claimant must be defined as contractor or subcontractor as described in the Mechanics Lien Act. This act defines a contractor as any person who enters into a contract with the owner of the land or property in question for the purpose of improving or maintaining the land or structure on the land. A subcontractor is one who contracts with the general contractor to do a portion of the work but is not privy to the contract between the general contractor and the owner. A first-party materials provider to the general contractor may also be considered a subcontractor. Simply stating that one is a contractor or subcontractor, even in the terms of the contract, is not enough to establish proof when reviewing a case. The facts of the relationship must be examined in order to establish what role was actually played.
What's in the Contract?
The burden of proof is on the lien claimant to show that he or she has a contract to support the claim. Under the Mechanics Lien Act, the contract can be written or oral, however, a case based on an oral contract may be harder to prove. Ultimately, the written or oral contract must exist in some form and support the stipulations in the claim.
The contract must be legal, and not void due to violation of law or public policy. For example, a lien from an unlicensed contractor would be unenforceable.
Who is the contract with?
In order for the lien claim to be valid, it must fall into one of three categories.
- Contract with the owner. Depending on how the property is titled, the business situation, and how many parties are involved, the “owner” of a business can sometimes be ambiguous. However, if the contractor does his or her due diligence, it should be clear at least who the owner is in name, whether an individual, commercial entity, bank or something else.
- Contract with the owner’s authorized agent. Here we have an individual or entity who has the authority to act on behalf of the owner. It may not always be apparent that an individual is an authorized agent for a given piece of real estate and often it falls on the court to make the determination. For example, if multiple individuals own one half undivided interest in a property and another person owns the other one half undivided interest, the latter individual’s actions can be considered those of the authorized agent for the whole.
- Knowingly permitted by the owner. This is an individual who “has the permission of the owner,” to contract work on a property. This permission doesn’t have to be in the form of a written document as long as it can be proven in court. For example, if the owner of a building knowingly allowed a tenant to contract work for improvements the lien against the tenant and owner would be valid.
Did the Claimant Provide Lienable Labor or Material?
The keyword when asserting a valid lien is “improvement” to the property. Did the claimant actually improve the property in anyway? The Mechanics Lien Act goes into great detail when defining “improve” as it relates to work done or materials provided by a contractor or subcontractor. When considering materials provided, it is not necessary that the materials actually be incorporated into a structure for a lien to be valid, but rather must have at least been delivered and knowingly received by the client.
Did the Lien Claimant Finish The Project?
A contractor must have completed the work set forth in the contract, or be able to show that he or she, in good faith, made the greatest attempt to complete a “substantial portion” of the work agreed upon in the contract. If the appropriate amount of work was not completed the contractor must be able to provide a valid excuse for nonperformance, such as an owner excusing the contractor from a worksite, making it impossible for the contractor to finish the work. Breach of contract by the owner is another valid excuse for nonperformance. In the case of a subcontractor leaving a job site due to action on the part of the contractor, and the work being incomplete, the contractor would not have a valid excuse for nonperformance.
Evaluating all the prerequisites for a lien is the first step in finding a defense against a Mechanics Lien. Beyond the prerequisites, there are a number of other factors associated with a proper Mechanics Lien. These include:
- Timely perfection of the lien
- The specific requirements of a general contractor
- The specific requirements of a subcontractor and materials supplier
- Evaluating the time periods surrounding the work done and the claim
- Amendments to the lien
- Proper information recorded in the Lien
- Verification of the Lien
- The balance due to the claimant
- Description of the property
- Time-frame associated with the lien and the claimant
For more information on a Mechanic’s Lien, the Mechanics Lien Act and the applicable deadlines check out the article How to Perfect a Mechanics Lien In Illinois.