Articles

I Have a Mechanics Lien, Now What Do I Do With It?

By: Lance Ziebell

August 28, 2013

A mechanics lien permits an individual or party who does repairs to a person’s home to file a lien against the property owner’s real property.  It can be a useful tool in a contractor’s arsenal to force a homeowner to pay the contractor when a homeowner is reluctant to do so.  While the requirements to have a valid mechanics lien are outside the scope of this article, suffice it to say that a valid mechanics lien provides a contractor with some leverage against a homeowner who does not want to pay their bill.  The question becomes what does the contractor do with its mechanics lien if the homeowner still refuses to pay their bill.

The primary remedy a contractor has to enforce its mechanics lien claim is to foreclose the mechanics lien.  Some contractors are surprised to find out they may foreclose on a homeowner’s property via their mechanics lien.  However, this is the remedy which is provided by the Mechanics Lien Act.  And it is a powerful one.  If a contractor has a valid mechanics lien and has filed its claim for lien within 4 months of completing work on the homeowner’s property, then the contractor’s mechanics lien may even trump a first mortgage.  This would, in essence, make the contractor the primary lien holder and could permit the contractor to purchase the property at auction thereby making the contractor the owner of the home.  This possibility often brings even the most recalcitrant homeowner to the table to try and square things up with the contractor.  Even in cases where the contractor files its lien claim after the four month window, as long as the claim for lien is filed within 2 years of the contract’s completion, the contractor can still foreclose the lien.  The primary difference between the aforementioned time frames is that as opposed to being in a primary lien position, the contractor who files a claim for lien after the 4 month period only has priority over later lien holders but not over preceding lien holders.  Put another way, while a contractor could still foreclose on the homeowner’s property and purchase it at sale, the contractor’s ownership of the property would be subject to all prior liens, possibly including a mortgage.  However, often the mere threat of foreclosure, no matter the contractor’s lien position, can be enough incentive for the homeowner to resolve its issues with the contractor.

In addition to foreclosing its mechanics lien, a contractor can bring breach of contract and unjust enrichment claims against the homeowner at the same time it seeks to foreclose its mechanics lien.  Accordingly, in some cases where a mechanics lien might be found invalid, a contractor still has remedies against the homeowner.  The only difference is that as opposed to being governed by the Illinois Mechanics Lien Act, the contractor’s remedies fall under traditional common law principles.

If you have any questions regarding mechanics liens, please feel free to contact me at 847-705-7555.