Filing a mechanics lien in Illinois can be Tricky. Fortunately, the “5 things to know” below can help get you started.

There is Some Tension about Who Qualifies to File a Mechanics Lien in Illinois

Both original contractors (contractors in direct contract with the property owner such – as architects, engineers, construction managers and laborers) and sub-contractors have the right to file a mechanics lien in Illinois. However, there is some controversy about work that qualifies as lien worthy. The general rule states that labor, materials and services must be “used in” or “attached” to the construction, but the interpretation of this standard is gray. The determination of whether work has attached or been incorporated into the property is made on a case by case basis.

The Parties Against Whom the Lien is Effective Depends on When It is Filed

There are two deadline to file a mechanics lien in Illinois. For a lien to be effective against all parties (including subsequent purchasers), the deadline is 4 months from the completion of the project. To be effective against the original property owner only, the lien may be filed up to two years after providing service or materials. This deadline is firm, even against court imposed delays so make sure to allow an appropriate amount of time in case of set back.

Preliminary Notice Rules Depend on the Project Type

General contractors, or any other party with a direct contract with the property owner, are never required to give preliminary notice in Illinois. Project participants who are not in contact with property owner (or the property owner’s agent), must give a Notice of Intent to Lien within 90 days of last furnishing labor and/or materials, and may also be required to give preliminary notice within 60 days of first furnishing labor and/or materials depending on project type. For projects on an owner-occupied single-family residence (1-4 units), a notice must be sent within 60 days of the potential lien claimant’s first furnishing of labor and/or materials to the project. The notice should be sent by certified mail with delivery restricted to the addressee only and a return receipt requested.

All project participants not in direct contract with the property owner are required to send a notice of Intent to Lien on all projects, within 90 days of the last day that service or materials were provided. Again, the notice should be sent by certified mail with delivery restricted to the addressee only and a return receipt requested.

Sending preliminary notice on time is crucial. In an owner-occupied single-family residence especially, lien rights may be reduced significantly depending on whether or not the owner has made any payments to the prime contractor.

Written Notice of Lien Filing is Required After a Lien is Filed by a Prime Contractor

If a prime contractor has provided services or material on an owner-occupied single-family residence, and subsequently filed a lien, that contractor must give the owner written notice of the lien’s filing within 10 days of filing the lien. A notice is considered served when sent or personally delivered. Sub-contractors are not required to give notice to the property owner that a lien was filed.

Date of Lien’s Attachment Determines Priority

The date of attachment is determined by the date of the contract between the owner and the original contractor. If the lien attached to the property prior to a mortgage, the mechanics lien has priority. On the flip side, a mechanics lien does not have priority over any encumbrance that attached to the property prior of the date of contract between the owner and original contractor.

Written by Scott Wolfe Jr See original article at Illinois Mechanics Lien Law: 5 Things to Know Originally posted on the LIEN

A mechanics lien is an extremely powerful tool unpaid contractors and subcontractors can use to get paid.  One of the ways in which a mechanics lien affects a property is that it can “cloud” the property’s title.  In layman’s terms, a property with clouded title becomes extremely unattractive to potential buyers or creditors since there is always a risk that the property could be foreclosed on and sold in order to satisfy the mechanics liens.  (Remember that a mechanics lien may remain on the property if sold, depending on the state and whether or not any state-specific requirements are met.)  Therefore, property owners are usually motivated to remove a mechanics lien from the property as soon as they can.

“Bonding-Off”: One Way to Remove a Mechanics Lien

Although the Lien blog already has some excellent resources on what bonding-off a mechanics lien is and how it works, for the sake of this post the topic is worth recapping.

“Bonding-off” a mechanics lien is a procedure for replacing a mechanics lien with a payment bond.  A real-life example may make this process easier to understand.

Let’s say a carpenter does $20,000 of work on a property.  When the property owner doesn’t pay the carpenter’s invoices, the carpenter decides to file a mechanics lien on the property.

The property owner doesn’t like the fact that there’s now a mechanics lien on his property because he knows that the lien will affect his ability to sell the property or obtain further credit on the property (like refinance).  Besides going to court to court to remove the lien, the property owner can substitute the right against the property with a bond.  This procedure is called “bonding-off” a mechanics lien.

In essence, the property owner is agreeing that if he is liable to pay the carpenter’s unpaid invoice, the recovery will be against the bond money instead of the property potentially having to be sold to satisfy the debt.  Additionally, if the owner has replaced the mechanics lien with a bond the owner can proceed to sell the property or get extra loans on it without having to worry that potential buyers or creditors will be turned off by the fact that there is a lien on the property.

States have different laws surrounding bonding-off, if they have them at all.  For example, Texas law  requires all property owners seeking to replace a mechanics lien with a bond to make the bond amount at least 1.5 times the amount claimed in the lien (when the lien claims more than $40,000) or double (when that amount is less).  Therefore, if the property owner in the example above wanted to bond-off the carpenter’s mechanics lien, he would have to take out a bond worth $40,000, or double the $20,000 claimed in the lien.

Bonding-Off in Illinois

Illinois, unlike Texas, for example, does not currently have a bonding-off provision in its mechanics lien law.  This statutory gap, however, may be filled by a piece of legislation currently working its way through the Illinois legislature, HB 2804.

The legislature has provided a synopsis of the bill:

[The bill p]rovides that an applicant may at any time file a petition to substitute a bond for the property subject to a lien claim under the Act with the clerk of the circuit court of the county in which the property against which the lien claim is asserted is located, or if there is a pending action to enforce the lien claim, an applicant may timely apply to become a party to the pending action at any time before a final judgment is rendered and file a petition to substitute for the property subject to the lien claim in the pending action.

In translation, the bill, if passed, would allow property owners to replace a mechanics lien with a bond at any time before a final judgment on the mechanics lien is issued.  For example, even if a party has already sued to foreclose on the lien, the property owner may still substitute the lien with a bond.  The party suing to foreclose on the mechanics lien would then have to sue on the bond instead.

Illinois’s HB 2804 is a substantial piece of proposed legislation that would add more nearly ten pages to Illinois mechanics lien law.  The petition to bond-off the lien would have to include information such as the name and address of the owner and the lien claimant, a description of the property subject to the claim, a copy of the mechanics lien, a copy of the proposed bond, and even evidence that a second eligible surety is available in case the proposed surety ceases to provide a valid bond.  The law even includes a template with the exact language the petition must include.

Will the Illinois Mechanics Lien Law Amendment Pass?

The bonding-off amendment to Illinois mechanics lien law is still in its very early stages.  As of the March 22, 2013, the last time any action was taken regarding the bill, all that occurred was that the bill was re-referred back to the Rules Committee from the Judiciary Committee.  Additionally, the bill only has one current sponsor who filed it more than a month and a half ago.

Does the bill’s slow progress mean that it won’t get passed and subsequently signed into law? No.  In fact, the Illinois legislature recently amended its mechanics lien law, so there’s no reason to believe the revisions to the lien law in Illinois will not continue.

Written by Elliot Singer See original article at Mechanics Lien Law: Illinois Considering “Bonding-Off” Amendment Originally posted on the LIEN

The mechanics lien laws vary by state – not county. Nevertheless, there is practical information about each county recorders office that is critical to know when filing a mechanics lien claim. This is especially true in Cook County, Illinois, one of the largest county recording offices in Illinois and in the entire United States. This post explores the suggested methods of delivering a mechanics lien for recording in Cook County…and one method you want to avoid at all cost.

Your Mechanics Lien Isn’t Recorded…Until It’s Recorded

The law is very unforgiving when it comes to presenting a mechanics lien claim. While state courts will seesaw between strictly and liberally construing a mechanics lien statute, there is no such construction that will forgive a lien claimant when they file their claim late. Yes, even a day late. Yes, even if you have an excuse.

Every recorder office across the country is a little different as to how quickly they will process a filing. The larger the county, the more likely the county is to have a backlog of unfiled documents.  When you send a document to a county with a backlog you’ll be put in line – a line that sometimes takes days or weeks to get through!

We wrote about this problem with the Los Angeles recorder in the past. At the time they were reporting a 10-20 day wait time for recording and a 10 week wait time for returning documents!  That’s a ton of time. It’s especially a ton of time when you have a mechanics lien deadline to abide by and your date of filing may make a difference in your lien’s priority.

Avoid The Mail When Filing A Mechanics Lien in Cook County

That brings us to Cook County, Illinois.  This is a big county – it includes the city of Chicago, and is the second largest county in the United States. Accordingly, this county recorder’s office is busy.

You can jump the queue by delivering your mechanics lien in-person (ah, the lines, parking, etc.), through private courier for a fee, or even through FedEx. Most counties – Cook County included – will give priority processing to FedEx or UPS deliveries.

The absolute best way to file a mechanics lien in Cook County Illinois is by electronic recording. The amount of time, money and uncertainty that is saved by e-filing your mechanics lien cannot be understated. Instead of waiting in lines, worry about whether a courier is going to get to Cook County on time, or other inconveniences, a mechanics lien submitted electronically for recording in Cook County may be completed within a matter of minutes or hours.

More Tips On Recording A Mechanics Lien in Cook County

Avoiding the U.S. Postal Mail when sending a mechanics lien for recording in Cook County, Illinois, is just one of the many things you’ll need to know when proceeding with your lien claim in that county. We recently published a presentation guide on filing a mechanics lien in Cook County that offers more tips.  View that presentation on our blog here:  Information on Filing A Mechanics Lien in Cook County, Illinois.

Related articles

• Mechanics Lien Property Description: More Difficult Than it Should Be
• Mechanics Liens: Electronic Filing
• Mechanics Lien: When Is It The Right Time To File?

Written by Scott Wolfe Jr See original article at Cook County Mechanics Lien: Avoid The Mail When Submitting Your Claim Originally posted on the LIEN

The Lien Blog and zlien’s Mechanics Lien resources are stuffed with information about the mechanics lien laws as they vary from state-to-state, but we rarely analyze these laws at the county level. Yesterday, however, we broke the mold and published a fantastic guide to filing a mechanics lien in Cook County, Illinois. That guide is above.

What You Need To Know About Filing A Mechanics Lien In Cook County That Is Different From Illinois Generally

Most mechanics lien information we publish regards the state’s general law and not any rule specific to a county. There’s good reason for this practice as these laws are creatures of the state legislature and vary by state, not by county.

The above presentation provides you with some practical tips about filing a mechanics lien in Cook County, Illinois. We consider this to be pretty high-level information about getting a mechanics lien recorded in that county, and it is the by-product of years of experience in recording lien claims for clients in Cook County.

Here is some example information disclosed in the presentation. Again, some of this may or may not apply to other counties in Illinois, but it definitely applies in Cook County:

• Make sure you send your mechanics lien by fed ex, in-person delivery or courier or by electronically recording. Mailed liens do not get filed immediately upon receipt, and may be subject to a long back log.
• You should use letter sized paper for your mechanics lien, and not legal or other sizes in Cook County
• If you want to get a copy back, you aught to deliver an extra copy with your filing and provide the county with a self-addressed stamped envelope for return to you.

Related articles

• Mechanics Lien: Filing Procedures
• Mechanics Liens: Electronic Filing
• Mechanics Liens: How does Zlien sign your documents?

Written by Scott Wolfe Jr See original article at Cook County Mechanics Lien: Information On Filing In Cook County, Illinois Originally posted on the LIEN

In a landmark case decided in February of 2011, LaSalle Bank National Association v. Cypress Creek 1, the Illinois Supreme Court took a major step towards limiting the rights of mechanics lien claimants, by changing their lien priority.  The Paid Blog addressed this case when the ruling was issued and then followed-up when a new law was proposed which addressed the court’s ruling and then passed by the Illinois state legislature .  Fortunately for subcontractors and suppliers, Governor Pat Quinn signed the law into effect on February 11, 2013.

How Did LaSalle v. Cypress Creek Limit Lien Claimants’ Rights?

Overruling years of a significantly different interpretation of an Illinois state law, the court in LaSalle ruled that mechanics liens were not entitled to any priority over mortgages on a property.  Instead of getting paid first above anyone else who was owed money on a project, unpaid subcontractors had to share whatever assets were left in a property equally with any mortgagees who had loaned money to the project.  

The case made serious waves in both the legal and construction communities because its ruling differed from not only Illinois’ traditional interpretation of the law but also most other states’ lien laws.  Generally speaking, unpaid subcontractors or suppliers are entitled to priority over anyone else who is owed money, even banks.  Of course, lenders (such as the plaintiff in LaSalle) loved the new interpretation but many – including the unpaid concrete and construction firms who had filed millions of dollars in mechanics liens on the property – were furious over the change in law.  As another blog notes, “This decision significantly benefitted lenders in determining its share of available proceeds, and, depending on the circumstances, significantly decreased the amount available for mechanics lien claimants.”

How the New Law Eliminates Those Limitation on Second Tier Mechanics Lien Priority

An amendment of an existing Illinois state law restores the priority mechanics lien claimants have over lenders.  The new law, in fact, makes this priority crystal clear:

“No incumbrance [mortgage] upon land . . . shall operate upon the building erected, or materials furnished until a lien in favor of the persons having done work for furnished material . . . have been satisfied.”

In plain English, that means that unpaid subcontractors and suppliers get paid before anyone else, including banks.  In the unfortunate case that the property must be sold to satisfy the creditors but that its value isn’t enough to pay all the parties who are still owed money, mechanics liens “shall have a paramount lien” as to the value of both the land and any improvements. This foremost lien priority is a huge benefit to second-tier mechanics lien claimants in Illinois.

Other Changes in Law

In Illinois, property owners who have mechanics liens placed on their property have a right to force the unpaid subcontractor to sue within 30 days of demanding such a lawsuit.  This demand is commonly called “thirty-day notice.”  If the lien claimant on whom notice is served does not file a lawsuit to foreclose on the lien within 30 days then that claimant forfeits any mechanics lien he or she placed on the owner’s property.  Subcontractors and suppliers should take note of this provision; while the new law greatly expands the rights of mechanics lien claimants, it also does protect property owners in other ways as well.

Previously, however, this notice could have technically been buried in a letter sent to the subcontractor or supplier and printed in tiny font but still be legitimate under the law.  The new law now requires that such notice be printed in at least 10-point font and in bold.  Lien claimants should therefore always be on the lookout for the following text:

“Failure to respond to this notice within 30 days after receipt, as required by Section 34 of the Mechanics Lien Act, shall result in the forfeiture of the referenced lien.”

Postscript: The Illinois Bankers Association

In an earlier post we noted that the Illinois Bankers Association, for obvious reasons, urged lawmakers not to pass the amendment.  The Association even posted a video on Vimeo to make their case to the public.

It’s probably time to take that video down.

Written by Elliot Singer See original article at Illinois Mechanics Lien Priority: New Law Expands Protection Originally posted on the LIEN

Filing a mechanics lien in Illinois, just like in any other state, can be a technical and error-prone task.  As we’ve stated over and over again on this blog, mistakes are common, and they can be fatal to the effectiveness of your claim.  This article guides you step-by-step on filing an Illinois mechanics lien claim, and includes a free mechanics lien form at the bottom.

Step 1: Do You Have The Right To File A Mechanics Lien?

The first step in filing your mechanics lien claim in any state, including Illinois, is to determine if you even have the right to file a mechanics lien claim.  Not everyone is qualified to file these instruments, and of those who are qualified, not everyone has preserved their right to file by staying compliant with the statute.

Relatively speaking, Illinois is pretty liberal about who has the right to file these claims and what those parties must do to preserve their rights.

Question #1 in Zlien’s Illinois Mechanics Lien Frequently Asked Questions page is “Who Can File,” and the answer provided makes it clear that many parties associated with a construction project is qualified to file, but restrictions start to apply when looking at the underlying work performed.  While it’s clear that any labor or materials “attached” or “used in” construction is qualified for rights, there is gray area about what this means:  See When Is Property “Attached” For Purposes of Filing A Mechanics Lien.

If you’re furnishing materials or labor qualified for lien protection, it’s highly likely that you have a mechanics lien right as there are few preliminary notice requirements in the state (only for owner occupied single family residence works) and the lien period is quite long (up to 4 months).

Step 2:  Deliver A Notice of Intent to Lien Within 90 Days of Last Furnishing

The Notice of Intent to Lien must be sent to the property owner, general contractor and mortgage lender, and it must be served by certified mail, return receipt requested with delivery restricted to the addressee only.  Whew!  Make sure you get all of that right.

It is entirely possible that your claim will get paid after the owner receives this notice of intent, and that the mechanics lien will not be necessary.  But, if it is…

Step 3: Prepare Your Mechanics Lien Form

Now it is time to file your mechanics lien, which means it is time to prepare the document. Illinois statutes are quite strict about exactly what content must be included in your mechanics lien claim. Therefore, you will want to use a form from a reputable source, and you’ll want to be very careful when filling it out.

The Illinois Mechanics Lien Action § 60/7(a) seems easy to follow, stating the following about the mechanics lien claim:

[The claim of lien must be] verified by the affidavit of himself or herself, or his or her agent or employee, which shall consist of a brief statement of the claimant’s contract, the balance due after allowing all credits, and a sufficiently correct description of the lot, lots or tracts of land to identify the same…

One tricky thing about filing a mechanics lien in any state is figuring out how exactly to describe the property. Most states require a legal property description or something between a legal property description and an ordinary address.  Illinois appears to fall in the latter category, although the best practice is to just use the legal property description.

Step 4: File The Mechanics Lien With The Illinois Recorder of Deeds

Your mechanics lien claim is effective only upon recording. Remember that it doesn’t matter when you make demand, when you send a notice of intent to lien or when you actually prepare your mechanics lien document; the only way you’ll get your mechanics lien to be a timely claim is to get it recorded on time.

In Illinois, mechanic lien claims must be recorded with the Recorder of Deeds office for the county where the property is located.

Dealing with county recorders can be very aggravating.  Remember to have patience, the correct margins, the correct filing fee and a document that otherwise conforms with their requirements.

Step 5: Monitor Your Illinois Mechanics Lien and Foreclose If Necessary

Filing an Illinois mechanics lien is quite powerful. Unlike a state like California where the mechanics lien claim is only effective for a period of 90 days, lien claims filed in Illinois are effective for 2 years after completion of the underlying project!  This is a pretty significant amount of time.

Nevertheless, you want to track this deadline and make sure you don’t blow through it.  If the mechanics lien claim is not paid and you miss this deadline, your lien will expire and you’ll lose your rights.  Zlien actually tracks this deadline for you in their system when you order a mechanics lien through them.

Free Illinois Notice of Intent to Lien Form

As above indicated, a notice of intent to lien must be served before filing an Illinois mechanics lien.  This form is free for your company to download, and is the Illinois notice of intent to lien form.

Free Illinois Mechanics Lien Form

After you serve the Notice of Intent to Lien, and if you remain unpaid, you’ll be qualified to file your mechanics lien claim.  This is a free form available for your company to download for an Illinois mechanics lien.

For Subcontractors and Suppliers

For General Contractors or Prime Contractors

Written by Scott Wolfe Jr See original article at Illinois Mechanics Lien: How To File Your Claim and Get Paid Originally posted on the LIEN

Earlier this week someone asked a question on Avvo.com about whether a mechanics lien would be effective if filed after ab original owner sold the property. This is a great question that comes up pretty infrequently, but depending on the applicable state law, may be a great illustration of how effective and dangerous mechanics lien claims can be.

Most States Will Hold A New Owner Responsible For An Old Owner’s Mechanics Lien Claim

All state laws require that mechanics lien claims be filed within a defined period of time, and when a claim is filed it impacts the title to the underlying property.  What happens if the property owner who commissioned the construction work sells the property to an unsuspecting third party before the mechanics lien claim is filed?

If the mechanics lien claim is timely filed, most states have little sympathy for the third party buyer. The claim is usually effective against the property, and the third party must seek his or her remedy from the original owner who sold them the property.

There are some exceptions, which fall into two categories.

Some States Restrict Liability of Third Party Buyers

Illinois is a state that directly restricts the liability of third party buyers.  There are actually two mechanics lien deadlines within the state’s legislation.

The first expires within 4 months after the claimant’s last furnishing.  All liens filed within this period are effective against the property no matter what, which means that a third party buyer could be responsible for a previous owner’s unpaid work.

However, a second lien deadline expires 2 years after the claimant’s last furnishing. All liens filed after the 4 month deadline but before the 2 year deadline are enforceable against the original owner’s interest in the property only.

Unpaid Lien States Restrict Liens To Value of What Owner Still Owes

Some states restrict the value of a mechanics lien claim to the amount still withheld by the property owner. While this may not directly impact whether a lien is or is not effective against a third party owner, it has a lot of indirect implications.

One such state is New York. While a mechanics lien can be filed in New York at anytime within 8 months after last furnishing to the project, the lien is only effective as to the dollars still controlled by the property owner and yet to be paid to the general contractor.

At a practical level, a property owner selling a property to a third party usually has already paid out the entire contract amount to the prime contractor and thus insulated the property from a lien claim. If he or she has not, the third party buyer would have a very good claim against the owner because the owner would likely have made some type of misrepresentation in the documents.

Written by Scott Wolfe Jr See original article at What If Your Mechanics Lien Is Filed After The Owner Sells The Property? Originally posted on the LIEN

Illinois Bankers Association – Vote No on House Bill 3636 from SlatersGarage on Vimeo.

In early 2011, the Illinois Supreme Court issued a 5-2 decision in a mechanics lien priority case that prompted one member of the Illinois State Bar to proclaim the decision marked the “death of the mechanics lien.”  Two years later, the case is still making waves.

We originally reported the decision here in “Lien Priority Case Decided By Illinois Supreme Court,” and you can read all of the articles about the controversy in the tag: Lasalle Bank NA v. Cypress Creek I.  Long story short:  The Illinois Supreme Court had to decide what to do with a troubled construction project, and specifically with some money available to disburse between construction lender and mechanics lien claimants. Who had a priority interest in the money?

The answer was that construction lenders were equal to mechanics lien claimants, so that the lien claimants would not have priority over the lenders.

Earlier this month, the Illinois State Legislature approved HB3636 to amend the mechanics lien act and overturn the Cypress Creek decision. The bill now simply awaits Governor Quinn’s decision and signature before becoming law.

The guts of the new law provides as follows with respect to the priority war between mechanics lien claims and lender rights:

When the proceeds of a sale are insufficient to satisfy the claims of both previous incumbrancers and lien creditors, the proceeds of the sale shall be distributed as follows: (i) any previous incumbrancers shall have a paramount lien in the portion of the proceeds attributable to the value of the land at the time of making of the contract for improvements; and (ii) any lien creditors shall have a paramount lien in the portion of the proceeds attributable to the value of all subsequent improvements made to the property.

To better explain all of this broo-rah-ha, take a look at the video published by the Illinois Bankers Association who lobbied to defeat HB 3636. That video is embedded above.  The lending interests hated HB 3636 because it gives lien claims a significant leg up on the lenders’ claims.

Fortunately for mechanics lien claimants in the state it looks like the lenders are on the losing side of this battle for now, and that the bill will soon become law.  Read The Full Text of HB 3636 Here.

Related articles

• Illinois House Votes to Pass HB3636 To Amend Mechanics Lien Act

Written by Scott Wolfe Jr See original article at Illinois Mechanics Lien Rises From The Dead: HB3636 Approved To Amend Mechanics Lien Act Originally posted on the LIEN

Justice Howse, of the Illinois Court of Appeals, who wrote the opinion in Bank of NY v. Jurado.

As far as lien foreclosure deadlines are concerned, Illinois has a pretty liberal rule. Unlike states like California where lien claims must be foreclosed upon within just 90 days from its filing date, claimants in Illinois need not foreclose on their mechanics lien claims until two years after the completion of their contract.

In a recent case before the Illinois First District Court of Appeals, a contractor asked that it be excused for filing its lien foreclosure action two months late because of some unique circumstances. The court refused.

Facts: Lien Foreclosure Late Because Of Existing Litigation

The law is unfortunate because it too often creates confusing procedural situations. One party sues another party, who countersues, who ties in another third party, and so on and so forth.  Sometimes it can leave lawyers scratching their heads as to how to deal with a particular situation.

Such appears to be the case in Bank of N.Y. v. Jurado, an appeals decision handed down just this past week on September 21, 2012.

Prior to the mechanics lien foreclosure deadline the parties were involved in litigation between one another where the plaintiff (the bank, and not the lien claimant) had filed a lawsuit and gotten a default judgment against the lien claimant.  The lien claimant was on their heels and had to file an action to vacate the default judgment (which they won).

Now here was their dilemma: They had a deadline to file their foreclosure action, and that deadline was approaching.  The procedural rules required that any actions that relate to the principal action must be filed within that proceeding as a counterclaim. However, since the lawsuit was pending, the claimants were required to get “leave of court” to file the foreclosure action.

So, they sought leave of court. The court – as courts so often do – dragged their feet and didn’t get around to granting the leave. This delayed the claimant’s ability to file the foreclosure action on time. When it was finally filed the plaintiffs argued that it was late and should be struck.  The appeals court, as we will examine below, agreed.

Illinois Court Holds That The 2 Year Deadline Is Firm, With No Exceptions

The trial court had ruled in this case as follow:

No rule of law precluded RBM [the defendant, lien claimant] from filing its own complaint at any time within the two year period following completion of its work. Not having done so, and not having filed its counterclaim in the pending mortgage foreclosure lawsuit, RBM has forfeited its right to enforce its mechanics lien.

RBM argued that it had lodged the lien foreclosure action in the Illinois court record before the 2 year deadline as it was attached to its motion to vacate and request for leave. Remember, RBM was procedurally required to get leave of court before the foreclosure action could be formerly filed in the action that was pending.

While that is true, the Illinois appeals court held that the claimant didn’t quite do enough and may have had other options. Here are the suggested options:

Court Says Lien Claimant Should Have Pestered Lower Courts For Expedited Ruling

While the appeals court doesn’t say that RBM was required to ask for an expedited hearing or notify the trial court of the approaching foreclosure deadline, they do imply that RBM could have done these things and that this justifies the trial court and appeals court determination that the foreclosure action was ultimately tardy.

The court states ” [T]here is no indication in the record that after RBM…ever informed the trial court that its two-year deadline was approaching on June 14, 2008 or that an expedited hearing was needed.”

Court Says Lien Claimant Could Have Filed The Foreclosure Action Independent Of The Other Proceeding

The Illinois appeals court goes on to suggest that RBM had other procedural options aside from filing the counter-claim.  It could have, for example, filed an independent action for foreclosure and coupled it with an independent lawsuit to have the default judgment overturned.  This is supported by digging deep into the procedural rule book, which would have allowed RBM to “file its own case to foreclose the lien before the time elapsed because a void judgment could be attacked directly or collaterally.”

This appears to be very flawed logic to me.

First, RBM couldn’t have predicted that the trial courts docket was so full it would be unable to rule on the motion for leave within a very reasonable time of two months.  The appeals court even admits and agrees “that RBM took a proper course of action when it filed the motion to vacate the default judgment to protect its rights.”

According to my understanding of the rules of civil procedure in any state, if a party proceeds in a procedurally “proper course of action” they should be allowed to proceed, and not be required to have predicted that there was a more superior “proper course of action.”  Proper is proper.

Second, yes, RBM could have filed a seperate action based on Illinois unique procedural rule allowing for an independent action in this unique situation (a void judgment), but 99 out of 100 attorneys would have filed under the same caption.  It just makes sense, and it is in line with the judicial systems overall goal to foster an efficient judicial economy.

Conclusion – This Case Stinks

The court concludes with:

Section 9 of the Act provides that the counterclaim must be filed within two years of the completion of the work, not merely presented as an attachment. The arguments and authority presented by RBM to support its position in the trial court and on appeal are not persuasive. Accordingly, the judgment of the circuit court is affirmed.

This case stinks to me.

Yes, on the one hand, the two year foreclosure action is firm and should be implemented without exception.  On the other hand, however, the courts can always use equity considerations to avoid things exactly like this, where the law forced the lien claimant into this procedural riddle to which there was no escape and barely – but only retrospectively – an alternative.

The plaintiffs in this case would not have been prejudiced by allowing the filing as they were served with it through the motion to vacate and for leave. The foreclosure action itself – as an attachment, granted – was even a part of the record.

Nevertheless, lien claimants should take note of this harsh decision.  It is representative of the harsh legal reality out there when looking to file and enforce mechanics lien claims. You have strict lien deadlines to follow and you must follow them. No exceptions. Plan ahead, and be prepared to be pushed off course.  Don’t wait until the last day, week, month – or in this case – quarter.

Written by Scott Wolfe Jr See original article at Illinois Appeals Court Denies Excuse For Late Mechanics Lien Foreclosure Action Originally posted on the LIEN

Earlier this week I published an article about a recent case in California regarding manufactured homes, where the court was called upon to decide if a manufactured home sitting on a property’s foundation was “attached’” and part of the realty, or simply an unattached fixture.  The answer seems obvious and the court ultimately ruled that the home was an attached part of the real estate. Nevertheless, the fact that the case was so controversial and went so far (and is likely to go further to the Supreme Court) should be an indication that the question of what is and what is not an “attachment” can be sticky.

Why It Matters When Filing A Lien Whether Something Is Attached To The Property

First things first, why are we having this conversation?

This is a conversation we’ve had over and over again on this blog. See, for example, the “Incorporation” tag, or the Scenarios series of blog posts where we examine different types of work situations and whether they qualify for lien rights.

Every state is different in dictating what work is and is not qualified for lien rights. The state laws usually draw a line depending on the “incorporation” of the materials or labor into the improvement as a whole.  So, as a clear example, installing sheetrock is definitely lienable work but plugging a microwave in an outlet and setting it on top of a counter is not lienable work.

Of course this issue can be more gray.  What if, for example, the microwave is actually installed into custom cabinetry and is not as easily removed?

Looking at Illinois As An Example of Where States May Draw The Line

Again, each state is different in what constitutes an attachment and what does not. This blog post, however, will look to Illinois law to see how that state answers the question. Just as will be the case everywhere, the answer is found only on a case-by-case basis using case law and analogies as guidance.

I recently came across a great discussion of this issue in D.D. Kennedy Inc. v. Lake Petersbury Assoc. (1964), where the 4th District Court of Appeals stated:

The mere delivery of fixtures, apparatus, and machinery by a contractor, — electric wiring, motors, accessories, plumbing, piping, etc., — is not sufficient to authorize a decree establishing a contractor’s lien under Section 1 of the Act without any proof that such fixtures, apparatus, and machinery were used in such a manner as to become attached to or form a part of the real estate…where a lien is sought to be established for fixtures, apparatus, or machinery it must be alleged and proved that the things for which the lien is claimed were so attached to the building or improvement as to become a part of the real estate; whether or not machinery is within the lien law usually depends upon whether it has become a fixture…

This case – decided in 1964 – at least set a framework for making this attachment determination in Illinois, but it seems that the courts are still conflicted after all these years.

In 2002, for example, the Illinois 1st District Appeals Court acknowledged there was a “tension between a strict and liberal construction of the Act” in Luise Inc. v. Village of Skokie. In this case, the appeals court afforded liberal treatment to the act finding that the hauling of debris from the job site and delivery of raw materials to the site was lienable work because “the totality of the developing case law in all sections of the Act is broach enough to include” this type of work.

Of course, the court does not offer any clear instructions to future claimants as to what exactly constitutes lienable work and what does not. Clearly, however, allowing a lien to be filed for hauling materials away from the job site only is a far cry from the more strict interpretation of this issue.

For the time being, mechanics lien claimants and construction attorneys need to draw conclusions from this confusing jurisprudence, but it’s more likely a better plan to stay far away from the courts because that presents a significant unknown (see difficulty in challenging a lien).

Written by Scott Wolfe Jr See original article at When Is Property “Attached” For Purposes of Filing A Mechanics Lien Originally posted on the LIEN