98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
SB3023

 

Introduced 2/7/2014, by Sen. John G. Mulroe

 

SYNOPSIS AS INTRODUCED:
 
770 ILCS 60/1  from Ch. 82, par. 1
770 ILCS 60/21  from Ch. 82, par. 21

    Amends the Mechanics Lien Act. Provides that an agreement to subordinate a lien under the Act where the agreement is in anticipation of and in consideration for the awarding of a contract or subcontract, either express or implied, to perform work or supply materials for an improvement upon real property is against public policy and unenforceable. Deletes language providing that certain subordination provisions of contracts is not binding on the subcontractor unless set forth in its entirety in writing in the contract between the contractor and subcontractor or material supplier. Makes corresponding changes.


LRB098 17607 HEP 52719 b

 

 

A BILL FOR

 

SB3023LRB098 17607 HEP 52719 b

1    AN ACT concerning civil law.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Mechanics Lien Act is amended by changing
5Sections 1 and 21 as follows:
 
6    (770 ILCS 60/1)  (from Ch. 82, par. 1)
7    Sec. 1. Contractor defined; amount of lien; waiver of lien;
8attachment of lien; agreement to waive; when not enforceable.
9    (a) Any person who shall by any contract or contracts,
10express or implied, or partly expressed or implied, with the
11owner of a lot or tract of land, or with one whom the owner has
12authorized or knowingly permitted to contract, to improve the
13lot or tract of land or for the purpose of improving the tract
14of land, or to manage a structure under construction thereon,
15is known under this Act as a contractor and has a lien upon the
16whole of such lot or tract of land and upon adjoining or
17adjacent lots or tracts of land of such owner constituting the
18same premises and occupied or used in connection with such lot
19or tract of land as a place of residence or business; and in
20case the contract relates to 2 or more buildings, on 2 or more
21lots or tracts of land, upon all such lots and tracts of land
22and improvements thereon for the amount due to him or her for
23the material, fixtures, apparatus, machinery, services or

 

 

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1labor, and interest at the rate of 10% per annum from the date
2the same is due. This lien extends to an estate in fee, for
3life, for years, or any other estate or any right of redemption
4or other interest that the owner may have in the lot or tract
5of land at the time of making such contract or may subsequently
6acquire and this lien attaches as of the date of the contract.
7    (b) As used in subsection (a) of this Section, "improve"
8means to furnish labor, services, material, fixtures,
9apparatus or machinery, forms or form work in the process of
10construction where cement, concrete or like material is used
11for the purpose of or in the building, altering, repairing or
12ornamenting any house or other building, walk or sidewalk,
13whether the walk or sidewalk is on the land or bordering
14thereon, driveway, fence or improvement or appurtenances to the
15lot or tract of land or connected therewith, and upon, over or
16under a sidewalk, street or alley adjoining; or fill, sod or
17excavate such lot or tract of land, or do landscape work
18thereon or therefor; or raise or lower any house thereon or
19remove any house thereto, or remove any house or other
20structure therefrom, or perform any services or incur any
21expense as an architect, structural engineer, professional
22engineer, land surveyor or property manager in, for or on a lot
23or tract of land for any such purpose; or drill any water well
24thereon; or furnish or perform labor or services as
25superintendent, time keeper, mechanic, laborer or otherwise,
26in the building, altering, repairing or ornamenting of the

 

 

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1same; or furnish material, fixtures, apparatus, machinery,
2labor or services, forms or form work used in the process of
3construction where concrete, cement or like material is used,
4or drill any water well on the order of his agent, architect,
5structural engineer or superintendent having charge of the
6improvements, building, altering, repairing or ornamenting the
7same.
8    (c) The taking of additional security by the contractor or
9sub-contractor is not a waiver of any right of lien which he
10may have by virtue of this Act, unless made a waiver by express
11agreement of the parties and the waiver is not prohibited by
12this Act.
13    (d) An agreement to waive any right to enforce or claim a
14lien or an agreement to subordinate any lien under this Act
15where the agreement is in anticipation of and in consideration
16for the awarding of a contract or subcontract, either express
17or implied, to perform work or supply materials for an
18improvement upon real property is against public policy and
19unenforceable. This Section does not prohibit release of lien
20under subsection (b) of Section 35 of this Act or prohibit
21subordination of the lien, except as provided in Section 21.
22(Source: P.A. 94-627, eff. 1-1-06.)
 
23    (770 ILCS 60/21)  (from Ch. 82, par. 21)
24    Sec. 21. Sub-contractor defined; lien of sub-contractor;
25notice; size of type; service of notice; amount of lien;

 

 

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1default by contractor.
2    (a) Subject to the provisions of Section 5, every mechanic,
3worker or other person who shall furnish any labor, services,
4material, fixtures, apparatus or machinery, forms or form work
5for the contractor, or shall furnish any material to be
6employed in the process of construction as a means for
7assisting in the erection of the building or improvement in
8what is commonly termed form or form work where concrete,
9cement or like material is used in whole or in part, shall be
10known under this Act as a sub-contractor, and shall have a lien
11for the value thereof, with interest on such amount from the
12date the same is due, from the same time, on the same property
13as provided for the contractor, and, also, as against the
14creditors and assignees, and personal and legal
15representatives of the contractor, on the material, fixtures,
16apparatus or machinery furnished, and on the moneys or other
17considerations due or to become due from the owner under the
18original contract.
19    (b) If the legal effect of any contract between the owner
20and contractor is that no lien or claim may be filed or
21maintained by any one and the waiver is not prohibited by this
22Act, or that such contractor's lien shall be subordinated to
23the interests of any other party, and the provision is not
24prohibited by this Act, such provision shall be binding; but
25the only admissible evidence thereof as against a subcontractor
26or material supplier, shall be proof of actual notice thereof

 

 

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1to him or her before his or her contract is entered into. Such
2subordination provision shall not be binding on the
3subcontractor unless set forth in its entirety in writing in
4the contract between the contractor and subcontractor or
5material supplier.
6    (c) It shall be the duty of each subcontractor who has
7furnished, or is furnishing, labor, services, material,
8fixtures, apparatus or machinery, forms or form work for an
9existing owner-occupied single family residence, in order to
10preserve his lien, to notify the occupant either personally or
11by certified mail, return receipt requested, addressed to the
12occupant or his agent of the residence within 60 days from his
13first furnishing labor, services, material, fixtures,
14apparatus or machinery, forms or form work, that he is
15supplying labor, services, material, fixtures, apparatus or
16machinery, forms or form work provided, however, that any
17notice given after 60 days by the subcontractor shall preserve
18his lien, but only to the extent that the owner has not been
19prejudiced by payments made prior to receipt of the notice. The
20notification shall include a warning to the owner that before
21any payment is made to the contractor, the owner should receive
22a waiver of lien executed by each subcontractor who has
23furnished labor, services, material, fixtures, apparatus or
24machinery, forms or form work.
25    The notice shall contain the name and address of the
26subcontractor or material man, the date he started to work or

 

 

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1to deliver materials, the type of work done and to be done or
2the type of materials delivered and to be delivered, and the
3name of the contractor requesting the work. The notice shall
4also contain the following warning:
5
"NOTICE TO OWNER
6    The subcontractor providing this notice has performed work
7for or delivered material to your home improvement contractor.
8These services or materials are being used in the improvements
9to your residence and entitle the subcontractor to file a lien
10against your residence if the services or materials are not
11paid for by your home improvement contractor. A lien waiver
12will be provided to your contractor when the subcontractor is
13paid, and you are urged to request this waiver from your
14contractor when paying for your home improvements."
15    Such warning shall be in at least 10 point bold face type.
16For purposes of this Section, notice by certified mail is
17considered served at the time of its mailing.
18    (d) In no case, except as hereinafter provided, shall the
19owner be compelled to pay a greater sum for or on account of
20the completion of such house, building or other improvement
21than the price or sum stipulated in said original contract or
22agreement, unless payment be made to the contractor or to his
23order, in violation of the rights and interests of the persons
24intended to be benefited by this Act: Provided, if it shall
25appear to the court that the owner and contractor fraudulently,
26and for the purpose of defrauding sub-contractors fixed an

 

 

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1unreasonably low price in their original contract for the
2erection or repairing of such house, building or other
3improvement, then the court shall ascertain how much of a
4difference exists between a fair price for labor, services,
5material, fixtures, apparatus or machinery, forms or form work
6used in said house, building or other improvement, and the sum
7named in said original contract, and said difference shall be
8considered a part of the contract and be subject to a lien. But
9where the contractor's statement, made as provided in Section
105, shows the amount to be paid to the sub-contractor, or party
11furnishing material, or the sub-contractor's statement, made
12pursuant to Section 22, shows the amount to become due for
13material; or notice is given to the owner, as provided in
14Sections 24 and 25, and thereafter such sub-contract shall be
15performed, or material to the value of the amount named in such
16statements or notice, shall be prepared for use and delivery,
17or delivered without written protest on the part of the owner
18previous to such performance or delivery, or preparation for
19delivery, then, and in any of such cases, such sub-contractor
20or party furnishing or preparing material, regardless of the
21price named in the original contract, shall have a lien
22therefor to the extent of the amount named in such statements
23or notice. In case of default or abandonment by the contractor,
24the sub-contractor or party furnishing material, shall have and
25may enforce his lien to the same extent and in the same manner
26that the contractor may under conditions that arise as provided

 

 

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1for in Section 4 of this Act, and shall have and may exercise
2the same rights as are therein provided for the contractor.
3    (e) Any provision in a contract, agreement, or
4understanding, when payment from a contractor to a
5subcontractor or supplier is conditioned upon receipt of the
6payment from any other party including a private or public
7owner, shall not be a defense by the party responsible for
8payment to a claim brought under Section 21, 22, 23, or 28 of
9this Act against the party. For the purpose of this Section,
10"contractor" also includes subcontractor or supplier. The
11provisions of Public Act 87-1180 shall be construed as
12declarative of existing law and not as a new enactment.
13(Source: P.A. 94-615, eff. 1-1-06; 94-627, eff. 1-1-06.)