What You Should Know About Protecting Lien & Bond Claim Rights in Illinois
In 2019, Illinois HB2722 passed, which added protection under the payment bond for those who provide rental equipment to public projects. The legislation (effective 1/1/20) defines material, labor, apparatus, fixtures and machinery to include those rented items that are on the construction site and those rented tools that are used or consumed on the construction site in the performance of the contract on account of which the bond is given.
What else should you know about Illinois mechanic’s lien and bond claim rights? Read on!
Protecting Mechanic’s Lien Rights in Illinois
For private commercial projects, there is generally no statutory provision requiring a preliminary notice — but the pros know serving a non-statutory notice is a terrific best practice!
The lien is a two-step process: 1) serve the Notice of Lien and 2) file the Lien.
- Serve a copy of the notice of lien upon the owner and the lender within 90 days after last furnishing materials or services. The notice of lien is not required when contracting directly with the owner.
- File the lien within 4 months after last furnishing materials or services. In certain circumstances a lien may be filed after 4 months from last furnishing materials or services, but it will have limited effectiveness.
The lien is enforceable for the unpaid portion of the contract, except when the owner has disregarded the requirement to obtain sworn statements from contractors when making payments.
For private residential projects, which would be an owner-occupied single-family residence, there is a preliminary notice requirement.
- Contractors contracting directly with the owner: Provide a printed statement to the owner as part of your contract or as a separate printed statement and serve a Contractor’s Sworn Statement prior to payments being made by the owner.
- Those not contracting directly with the owner: Serve notice upon the owner within 60 days from first furnishing materials or services. A late notice may be served, but the lien, when later filed, will only be effective for amounts not paid to the prime contractor at the time the notice is received.
The mechanic’s lien guidelines for residential projects are the same as commercial projects, with one extra step: when contracting directly with the owner, serve a copy of the lien upon the owner within 10 days after filing the lien.
Should you need to proceed with suit to enforce your lien, whether on a commercial project or residential project, file suit within 2 years from last furnishing materials or services, but within 30 days from receipt of a demand to commence suit.
Did You Know? While the statute allows liens for those who lease construction equipment on a commercial project, the statute does not allow liens for those who lease construction equipment if the improvement is either a single-family residence or a multi-family residence of fewer than 12 units in a single building.
Need more details on mechanic’s liens in Illinois? Click here to read full statute!
Protecting Bond Claim & Public Improvement Lien Rights in Illinois
Like private commercial projects, public projects do not have a preliminary notice requirement. As a best practice, serve a non-statutory notice & include a request for a copy of the payment bond. Typically, for state projects or any political subdivision thereof, payment bonds are required for general contracts exceeding $50,000.
In the event you need to proceed with a bond claim, serve the bond claim notice upon the public entity within 180 days from last furnishing materials or services. Within 10 days from serving the public entity, serve a copy of the bond claim notice upon the prime contractor. File suit to enforce the bond claim within 1 year from last furnishing materials or services, but within 90 days from serving the public improvement lien, if a public improvement lien was served.
When proceeding with a public improvement lien, you should serve the lien upon the public entity and the prime contractor as soon as possible to trap funds, but within 30 days from written demand. The claim is a lien on the funds owed to the prime contractor by the owner at the time the lien is served.
Key Suit Notes for Public Improvement Liens
- File suit to enforce the public improvement lien within 90 days from serving the lien.
- On State projects, file suit at least 15 days prior to the date the appropriation of funds will lapse.
- Serve a copy of the complaint upon the owner within 10 days from filing.
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