Sen. Cristina Castro

Filed: 5/24/2018

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 5201

2    AMENDMENT NO. ______. Amend House Bill 5201, AS AMENDED, by
3replacing everything after the enacting clause with the
4following:
 
5    "Section 5. The Counties Code is amended by adding Sections
63-5010.8, 5-41065, and 5-43043 as follows:
 
7    (55 ILCS 5/3-5010.8 new)
8    Sec. 3-5010.8. Mechanics lien demand and referral pilot
9program.
10    (a) Legislative findings. The General Assembly finds that
11expired mechanics liens on residential property, which cloud
12title to property, are a rapidly growing problem throughout the
13State. In order to address the increase in expired mechanics
14liens and, more specifically, those that have not been released
15by the lienholder, a recorder may establish a process to demand
16and refer mechanics liens that have been recorded but not

 

 

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1litigated or released in accordance with the Mechanics Lien Act
2to an administrative law judge for resolution or demand that
3the lienholder commence suit or forfeit the lien.
4    (b) Definitions. As used in this Section:
5    "Demand to Commence Suit" means the written demand
6specified in Section 34 of the Mechanics Lien Act.
7    "Mechanics lien" and "lien" are used interchangeably in
8this Section.
9    "Notice of Expired Mechanics Lien" means the notice a
10recorder gives to a property owner under subsection (d)
11informing the property owner of an expired lien.
12    "Notice of Referral" means the document referring a
13mechanics lien to a county's code hearing unit.
14    "Recording" and "filing" are used interchangeably in this
15Section.
16    "Referral" or "refer" means a recorder's referral of a
17mechanics lien to a county's code hearing unit to obtain a
18determination as to whether a recorded mechanics lien is valid.
19    "Residential property" means real property improved with
20not less than one nor more than 4 residential dwelling units; a
21residential condominium unit, including, but not limited to,
22the common elements allocated to the exclusive use of the
23condominium unit that form an integral part of the condominium
24unit and any parking unit or units specified by the declaration
25to be allocated to a specific residential condominium unit; or
26a single tract of agriculture real estate consisting of 40

 

 

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1acres or less that is improved with a single-family residence.
2If a declaration of condominium ownership provides for
3individually owned and transferable parking units,
4"residential property" does not include the parking unit of a
5specified residential condominium unit unless the parking unit
6is included in the legal description of the property against
7which the mechanics lien is recorded.
8    (c) Establishment of a mechanics lien demand and referral
9process. After a public hearing, a recorder in a county with a
10code hearing unit may adopt rules establishing a mechanics lien
11demand and referral process for residential property. A
12recorder shall provide public notice 90 days before the public
13hearing. The notice shall include a statement of the recorder's
14intent to create a mechanics lien demand and referral process
15and shall be published in a newspaper of general circulation in
16the county and, if feasible, be posted on the recorder's
17website and at the recorder's office or offices.
18    (d) Notice of Expired Lien. If a recorder determines, after
19review by legal staff or counsel, that a mechanics lien
20recorded in the grantor's index or the grantee's index is an
21expired lien, the recorder shall serve a Notice of Expired Lien
22by certified mail to the last known address of the owner. The
23owner or legal representative of the owner of the residential
24property shall confirm in writing his or her belief that the
25lien is not involved in pending litigation and, if there is no
26pending litigation, as verified and confirmed by county court

 

 

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1records, the owner may request that the recorder proceed with a
2referral or serve a Demand to Commence Suit.
3    For the purposes of this Section, a recorder shall
4determine a lien is an expired lien if the lien is unenforced
5(if a suit to enforce the lien has not been commenced by the
6lienholder or a counterclaim has not been filed (within 2 years
7after the completion date of the contract as specified in the
8recorded mechanics lien, the completion of extra or additional
9work, or furnishing of extra or additional material under
10Section 9 of the Mechanics Lien Act; if a completion date is
11not specified in the recorded lien, then the work completion
12date shall be deemed the date of recording of the mechanics
13lien) and if an automatic stay under Section 362(a) of the
14United States Bankruptcy Code does not prohibit a suit or
15counterclaim to foreclose.
16    (e) Demand to Commence Suit. Upon receipt of an owner's
17confirmation that the lien is not involved in pending
18litigation and a request for the recorder to serve a Demand to
19Commence Suit, the recorder shall serve a Demand to Commence
20Suit on the lienholder of the expired lien as provided in
21Section 34 of the Mechanics Lien Act. A recorder may request
22that the Secretary of State assist in providing registered
23agent information or obtain information from the Secretary of
24State's registered business database when the recorder seeks to
25serve a Demand to Commence suit on the lienholder. Upon
26request, the Secretary of State, or his or her designee, shall

 

 

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1provide the last known address or registered agent information
2for a lienholder who is incorporated or doing business in the
3State. The recorder must record a copy of the Demand to
4Commence suit in the grantor's index or the grantee's index
5identifying the mechanics lien and include the corresponding
6document number and the date of demand. The recorder may, at
7his or her discretion, notify the Secretary of State regarding
8a Demand to Commence suit determined to involve a company,
9corporation, or business registered with that office.
10    When the lienholder commences a suit or files an answer
11within 30 days or the lienholder records a release of lien with
12the county recorder as required by subsection (a) of Section 34
13of the Mechanics Lien Act, then the demand and referral process
14is completed for the recorder for that property. If service
15under this Section is responded to consistent with Section 34
16of the Mechanics Lien Act, the recorder may not proceed under
17subsection (f). If no response is received consistent with
18Section 34 of the Mechanics Lien Act, the recorder may proceed
19under subsection (f).
20    (f) Referral. Upon receipt of an owner's confirmation that
21the lien is not involved in pending litigation and a request
22for the recorder to proceed with a referral, the recorder
23shall: (i) file the Notice of Referral with the county's code
24hearing unit; (ii) identify and notify the lienholder by
25telephone, if available, of the referral and send a copy of the
26Notice of Referral by certified mail to the lienholder using

 

 

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1information included in the recorded mechanics lien or the last
2known address or registered agent received from the Secretary
3of State or obtained from the Secretary of State's registered
4business database; (iii) send a copy of the Notice of Referral
5by mail to the physical address of the property owner
6associated with the lien; and (iv) record a copy of the Notice
7of Referral in the grantor's index or the grantee's index
8identifying the mechanics lien and include the corresponding
9document number. The Notice of Referral shall clearly identify
10the person, persons, or entity believed to be the owner,
11assignee, successor, or beneficiary of the lien. The recorder
12may, at his or her discretion, notify the Secretary of State
13regarding a referral determined to involve a company,
14corporation, or business registered with that office.
15    No earlier than 30 business days after the date the
16lienholder is required to respond to a Demand to Commence Suit
17under Section 34 of the Mechanics Lien Act, the code hearing
18unit shall schedule a hearing to occur at least 30 days after
19sending notice of the date of hearing. Notice of the hearing
20shall be provided by the county recorder, by and through his or
21her representative, to the filer, or the party represented by
22the filer, of the expired lien, the legal representative of the
23recorder of deeds who referred the case, and the last owner of
24record, as identified in the Notice of Referral.
25    If the recorder shows by clear and convincing evidence that
26the lien in question is an expired lien, the administrative law

 

 

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1judge shall rule the lien is forfeited under Section 34.5 of
2the Mechanics Lien Act and that the lien no longer affects the
3chain of title of the property in any way. The judgment shall
4be forwarded to all parties identified in this subsection. Upon
5receiving judgment of a forfeited lien, the recorder shall,
6within 5 business days, record a copy of the judgment in the
7grantor's index or the grantee's index.
8    If the administrative law judge finds the lien is not
9expired, the recorder shall, no later than 5 business days
10after receiving notice of the decision of the administrative
11law judge, record a copy of the judgment in the grantor's index
12or the grantee's index.
13    A decision by an administrative law judge is reviewable
14under the Administrative Review Law, and nothing in this
15Section precludes a property owner or lienholder from
16proceeding with a civil action to resolve questions concerning
17a mechanics lien.
18    A lienholder or property owner may remove the action from
19the code hearing unit to the circuit court as provided in
20subsection (i).
21    (g) Final administrative decision. The recorder's decision
22to refer a mechanics lien or serve a Demand to Commence Suit is
23a final administrative decision that is subject to review under
24the Administrative Review Law by the circuit court of the
25county where the real property is located. The standard of
26review by the circuit court shall be consistent with the

 

 

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1Administrative Review Law.
2    (h) Liability. A recorder and his or her employees or
3agents are not subject to personal liability by reason of any
4error or omission in the performance of any duty under this
5Section, except in the case of willful or wanton conduct. The
6recorder and his or her employees or agents are not liable for
7the decision to refer a lien or serve a Demand to Commence
8Suit, or failure to refer or serve a Demand to Commence Suit,
9of a lien under this Section.
10    (i) Private actions; use of demand and referral process.
11Nothing in this Section precludes a private right of action by
12any party with an interest in the property affected by the
13mechanics lien or a decision by the code hearing unit. Nothing
14in this Section requires a person or entity who may have a
15mechanics lien recorded against his or her property to use the
16mechanics lien demand and referral process created by this
17Section.
18    A lienholder or property owner may remove a matter in the
19referral process to the circuit court at any time prior to the
20final decision of the administrative law judge by delivering a
21certified notice of the suit filed in the circuit court to the
22administrative law judge. Upon receipt of the certified notice,
23the administrative law judge shall dismiss the matter without
24prejudice. If the matter is dismissed due to removal, then the
25demand and referral process is completed for the recorder for
26that property. If the circuit court dismisses the removed

 

 

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1matter without deciding on whether the lien is expired and
2without prejudice, the recorder may reinstitute the demand and
3referral process under subsection (d).
4    (j) Repeal. This Section is repealed on January 1, 2022.
 
5    (55 ILCS 5/5-41065 new)
6    Sec. 5-41065. Mechanics lien demand and referral
7adjudication.
8    (a) Notwithstanding any other provision in this Division, a
9county's code hearing unit must adjudicate an expired mechanics
10lien referred to the unit under Section 3-5010.8.
11    (b) If a county does not have an administrative law judge
12in its code hearing unit who is familiar with the areas of law
13relating to mechanics liens, one may be appointed no later than
143 months after the effective date of this amendatory Act of the
15100th General Assembly to adjudicate all referrals concerning
16mechanics liens under Section 3-5010.8.
17    (c) If an administrative law judge familiar with the areas
18of law relating to mechanics liens has not been appointed as
19provided subsection (b) when a mechanics lien is referred under
20Section 3-5010.8 to the code hearing unit, the case shall be
21removed to the proper circuit court with jurisdiction.
22    (d) This Section is repealed on January 1, 2022.
 
23    (55 ILCS 5/5-43043 new)
24    Sec. 5-43043. Mechanics lien demand and referral

 

 

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1adjudication.
2    (a) Notwithstanding any other provision in this Division, a
3county's code hearing unit must adjudicate an expired mechanics
4lien referred to the unit under Section 3-5010.8.
5    (b) If a county does not have an administrative law judge
6in its code hearing unit who is familiar with the areas of law
7relating to mechanics liens, one may be appointed no later than
83 months after the effective date of this amendatory Act of the
9100th General Assembly to adjudicate all referrals concerning
10mechanics liens under Section 3-5010.8.
11    (c) If an administrative law judge familiar with the areas
12of law relating to mechanics liens has not been appointed as
13provided subsection (b) when a mechanics lien is referred under
14Section 3-5010.8 to the code hearing unit, the case shall be
15removed to the proper circuit court with jurisdiction.
16    (d) This Section is repealed on January 1, 2022.
 
17    Section 10. The Mechanics Lien Act is amended by changing
18Section 34 and adding Section 34.5 as follows:
 
19    (770 ILCS 60/34)  (from Ch. 82, par. 34)
20    Sec. 34. Notice to commence suit.
21    (a) Upon written demand of the owner, lienor, a recorder
22under Section 3-5010.8 of the Counties Code, or any person
23interested in the real estate, or their agent or attorney,
24served on the person claiming the lien, or his agent or

 

 

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1attorney, requiring suit to be commenced to enforce the lien or
2answer to be filed in a pending suit, suit shall be commenced
3or answer filed within 30 days thereafter, or the lien shall be
4forfeited. Such service may be by registered or certified mail,
5return receipt requested, or by personal service.
6    (b) A written demand under this Section must contain the
7following language in at least 10 point bold face type:
8"Failure to respond to this notice within 30 days after
9receipt, as required by Section 34 of the Mechanics Lien Act,
10shall result in the forfeiture of the referenced lien."
11(Source: P.A. 97-1165, eff. 2-11-13.)
 
12    (770 ILCS 60/34.5 new)
13    Sec. 34.5. Mechanics lien administrative adjudication.
14    (a) Notwithstanding any other provision in this Act, a
15county's code hearing unit may adjudicate the validity of a
16mechanics lien under Section 3-5010.8 of the Counties Code. If
17the recorder shows by clear and convincing evidence that the
18lien being adjudicated is an expired lien, the administrative
19law judge shall rule the lien is forfeited under this Act and
20that the lien no longer affects the chain of title of the
21property in any way.
22    (b) This Section is repealed on January 1, 2022.".