Priority disputes happen a lot in mechanics’ lien litigation. Typically, a mortgage lender claims that its first-filed mortgage trumps a later-filed mechanics lien. The “trumps” part is activated if and when the property is sold and there aren’t enough proceeds to pay both the lender and contractor. If the lender’s mortgage has priority, it gets first dibs on the sale proceeds, leaving the …
Tag Archives: mechanics lien
Contractor’s Failure to Provide Sworn Statement Dooms Mechanics Lien Suit
A contractor lost its nearly $400,000 mechanics’ lien when it failed to serve a “Section 5 statement”, which lists subcontractors and amounts owed and owing, after the property owner requested one. 770 ILCS 60/5 (the “Lien Act”). In Cityline Construction v. Roberts, 2014 IL App (1st) 130730, the parties entered into an oral contract for fire restoration work. The plaintiff …
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Illinois Mechanics’ Lien General Contractor Doesn’t Morph Into a Subcontractor When Property is Sold Before Recording
Q: Does a general contractor transform into a subcontractor where a property owner sells its property to a third party AFTER the general contractor completes its improvements but BEFORE it records its mechanics lien? A: No. Q: Does it matter? A: Yes. Because unlike a general contractor, a subcontractor must serve a 90-day notice to the new owner in order …