The Devil is in the Details for Lien Claims
Too often contractors and subcontractors (“contractors”) have to bear the costs of a non-paying homeowner or developer. Section 7 of the Mechanics Lien Act (“the Act”) provides contractors with an invaluable tool to recoup his or her costs by allowing the contractor to make a lien claim against the property without first resorting to litigation.
Beyond the four month limitation on filing a lien claim, there are only three requirements for the actual filing: (1) a brief statement of the claimant’s contract; (2) the balance due after allowing all credits; and (3) a sufficiently correct description of the lot, lots, or tracts of land to make it identifiable. However, Illinois Courts have made it clear that in order for a lien claim to be valid, more than just a simple recitation of the requirements must be included in the filing.
What is Actually Needed in “A Brief Statement”?
Precision is key when crafting the brief statement. A recent article in the Illinois Bar Journal stated that a well-drafted lien claim will include: (1) the correct names of the parties; (2) whether the agreement is in writing or oral; (3) the date of the contract; and (4) a description of the work. If there is extra work, the claim should so state.”
Similarly, precision in drafting the original contract is just as necessary and often the decisive factor in determining the validity of a lien claim. Oral contracts lead to ambiguity and a court could construe a time and material contract into a lump sum contract, something no contractor would like to see if there is extra work performed on the project.
Should the Last Day of Work be Included in the “Balance Due” Requirement?
Although the Act does not require the lien claim to state when the last day of work was performed, it is clear from Illinois case law that it would be foolish to leave it out.
The hypothetical situation is: there is a single lien claim for several adjoining parcels of land and the work was completed at different times for each parcel. If no dates for completion are stated in the lien claim, an Illinois court may limit the amount of recovery, as the stated Balance Due was not adequately apportioned between the parcels.
Isn’t the Description Contained in the Plat of Subdivision Sufficient?
Illinois Courts have stated, in order for a description of land to be adequate it must be complete enough to locate and identify the land. This is of little to no help to most contractors. Generally, a metes and bounds description or a description of the common address alone will be insufficient to identify the land. Most counties in Illinois, including Cook, require the property PIN in order to record the lien, so why wouldn’t the PIN also be included on the lien claim itself. The Illinois Bar suggests, “includ[ing] as much information as you can in your lien, including the street addresses and other commonly known descriptions and, most importantly, an accurate PIN. The safest way is to take a description or a group of descriptions that you reasonably believe cover the property and attach them as an exhibit to your lien claim.”
Whether creating the original contract or filing the lien claim, accuracy is key. It is often fatal for contractors to make a cursory read of the Act and then briefly recite the three requirements of Section 7. It is extremely important to fully describe the circumstances, amounts, and parcels when filing a lien claim. Anything less would only waste more time and money.