REAL ESTATE LAW
How to Release a Mechanic's Lien in Illinois.
A mechanic’s lien is an interest in property that secures the payment of certain types of debts relating to work performed on real estate. Under the Illinois Mechanic’s Lien Act, there are generally two categories of people or entities who are entitled to a mechanic’s lien: 1) general contractors; and 2) subcontractors and material suppliers. Many property owners are unfamiliar with the provisions of the Illinois Mechanic’s Lien Act and assume payment to the general contractor absolves the owner of all liability to other potential lienholders – this is not always the case.
In order for a general contractor, subcontractor or material supplier to record a valid claim for lien on real property in the State of Illinois certain requirements must be met. For example, a general contractor must record its claim for lien within four months of the last day of providing labor or materials for the property, but is not required to provide the property owner with notice prior to recording the lien. On the other hand, a subcontractor or material supplier must serve the property owner with notice of intent to lien (60 days for a single-family owner-occupied property and 90 days for all other property) prior to recording a claim for lien within the fourth month requirement.
Once a mechanic’s lien has been recorded, it becomes a cloud or blemish on the owner’s title. During the period that the lien is valid, the lien must be addressed in order for the owner to sell or refinance the property. In addition, the property owner may be pressured by its lender to address the lien claim, due to the fact that the recording of a lien claim by a contractor or material supplier may affect the lender’s security position in the property.
Steps to Release a Mechanic’s Lien
An Illinois property owner who has a mechanic’s lien recorded against real property has several options depending upon how aggressive the property owner wishes to pursue the action. A general contractor, subcontractor or material supplier must file a lawsuit suit to enforce the mechanic’s lien within two years of the last day of supplying labor or materials to the property or else the lien is deemed null and void. As a result, a passive property owner could wait to see whether the lien holder pursues an action within the two-year period or waives right to enforce the lien.
However, a more aggressive property owner could send the lienholder a written notice demanding that the lienholder foreclose its lien within 30 days of the receipt of the demand or otherwise forfeit its lien rights pursuant to Section 34 of the Illinois Mechanic’s Lien Act. If the lienholder fails to file suit within 30 days, the lien is no longer valid.
Additionally, once the lien is invalidated, a property owner could then send the lienholder a written notice demanding a release of lien within 10 days of the receipt of the demand pursuant to Section 35 of the Illinois Mechanic’s Lien Act. If the lienholder fails to commence provide the property owner with a release of lien, then the lienholder will be liable for a penalty of $2,500 plus costs and reasonable attorneys’ fees incurred in connection with an action brought by the owner to remove the lien from the title.
How to Defend a Mechanic’s Lien Action
A general contractor, subcontractor or material supplier with a valid claim for lien could file suit to enforce the mechanic’s lien within two years of the last day of supplying labor or materials to the property. A suit to enforce the mechanic’s lien may result in the subject property ultimately being sold to pay the balance due under the lien claim. The following are some common defenses against a lien foreclosure suit:
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