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If the owner seeks Bankruptcy protection, you must proceed very carefully.Ī Bankruptcy petition causes an “Automatic Stay” to go into immediate effect - even against claimants who ddidn't know it was filed. The last day to file suit is 2 years after the last day of work. Here is what you need to know:Īs you know, the first step in "perfecting" your lien is filing the Notice with Recorder’s office in the county in which the property is located, then filing a lawsuit in that county.
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We recently fielded an Illinois priority question at the Expert Center which should be valuable too: Understanding Mechanics Lien Priority in Illinois.Īccording to your question, you have not yet recorded your Notice of Mechanics Lien, and the property Owner has filed Bankruptcy. A discussion of these events can be found in “ Illinois Mechanics Lien Law: New Law Expands Protection.” The legislature responded by passing a law restoring the priority. A controversial Supreme Court decision eliminated priority that lien claims previously enjoyed over other debts (like bank mortgages). Illinois courts and the legislature just went through a round-about regarding the state’s lien priority rules. If the mechanics lien attached after the mortgage – and funds are insufficient to pay both – the lien claimant still may recover, but the recovery is limited to a percentage based upon the value of the claimants improvements to the property. If the mechanics lien attached (date of attachment is the date of the contract between the owner and original contractor) prior to the date a mortgage was recorded, the mechanics lien has priority over the subsequent mortgage. Priorities between mechanics lien claimants and mortgagees in Illinois are unique. Accordingly, it doesn’t seem that property must be “permanent” for it to be “attached.” We discussed the case in “ Is the Definition of Construction Expanding in Illinois?” While not a mechanics lien case directly, the court was called upon to determine whether a temporary ventilation system and ductwork for a temporary heater was “construction of an improvement to real property.” They determined it was. See discussion in “ When Is Property ‘Attached’ For Purposes of Filing A Mechanics Lien.”Īn interesting case was just decided in Illinois that could impact what is considered lienable in the state.The general rule is that the labor, materials or services must be “attached” or “used in” the construction, but the interpretation of this standard is gray. There is some tension in the courts as to what work qualifies a party to file a mechanics lien. Subcontractors do not contract with the owner, but instead contract with another contractor – in Illinois the tiers of subcontractors who may file a mechanics lien are virtually unlimited: a sub-subcontractor is treated the same as a subcontractor. Original contractors include almost every party who contracts directly with the owner of the property: architects, engineers, construction managers, laborers, etc. In Illinois, original contractors, and subcontractors who provide labor or materials in the improvement of real property are entitled to lien rights.