Unpaid construction work? Stay calm – and make sure every word of your mechanics lien is accurate

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Thompson Coburn LLP

Not getting paid infuriates most contractors and material suppliers. Don’t let that anger cause you to make a bad situation worse by overdoing a mechanics lien. By the time a contractor reaches the point of recording a mechanics lien, it is often very frustrated at the owner/upstream contractor’s failure to make timely payment. As a result, whether a contractor or its counsel is preparing a lien, there is often a push to aggressively include all possible claims and charges. First, remember that a claimant swears to the accuracy of its lien under penalties of perjury. Second, in the haze of frustration and strong desire to protect all available rights, consider the following tips and best practices:

Don’t lien for work that is not yet complete
A recent case decided by the First District Appellate Court, Father & Sons Home Improvement II, Inc. v. Stuart, 2016 IL App (1st) 143666, highlights the importance of making sure that all statements made in your mechanics lien are entirely accurate. In that case, the builder’s lien contained a false completion date and falsely stated that it was owed payments not yet due it under the parties’ contract. Though the builder claimed these were honest mistakes, the court found that the lien was fraudulent and ordered the builder to pay its opponent’s legal fees. Thus, because of its improper lien, the builder not only wasn’t paid for its construction work but also paid its customer’s legal fees.

Don’t lien too much property
Always order a tract search and confirm the legal description of the exact parcel to which you supplied labor and/or materials. Never record the lien against multiple parcels “just to be safe.” Not only can doing so cause your entire lien to be found invalid, but you may also be ordered to pay your opponent’s legal fees. Lohmann Golf Designs v. Keisler, 260 Ill. App. 3d 886, 892 (1st Dist. 1994). Also, in the event you supplied labor/materials to more than one parcel (e.g., in a subdivision) or condominium unit, you may be required to apportion the amounts you are owed amongst the multiple lots/units you lien. Steinberg v. Chicago Title & Trust Co., 142 Ill. App. 3d 601, 610 (1st Dist. 1986).

Don’t lien for anything more than you are owed under your contract
It can be tempting to add additional “damages” that may not be available under your contract. However, Section 1 of the Illinois Mechanics Lien Act restricts a contractor’s lien rights to “the amount due to it.” 770 ILCS 60/1(a). Adding additional amounts to your lien claim could actually imperil the entire claim, though honest mistakes will not doom your lien. 770 ILCS 60/7(a).

Don’t lien for ‘non-lienable’ work
Only certain work is lienable under the Illinois Mechanics Lien Act. 770 ILCS 60/1. Lienable work must be separated from non-lienable work and the total amount due must be apportioned between the two types of work or the entire lien is defeated. Flader Plumbing & Heating Co. v. Callas, 171 Ill.App.3d 74, 77 (1st Dist. 1988).

If you violate any of these rules, you may not only lose your lien claim, but you may also have to pay other parties’ attorney’s fees or other sanctions. So stay calm!

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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