• A Contractor, or “general contractor,” is someone who has a contract directly with the owner of the property, or with someone “knowingly permitted” by the owner to improve the real estate. Determining who is the owner or “knowingly permitted” by the owner is discussed in more detail below.
• A Subcontractor is someone hired by the “general contractor,” rather than the owner, or the owner’s agent. Thus, the agreement to do the work is never made directly between the subcontractor and the owner.

• A valid contract: There must be a valid contractor for performance of the work. Although the contract can be verbal, it is always better practice to have a written contract, with a complete list of all work to be performed, and all of the terms of the contract clearly stated.
• The contract must be with the owner, or with someone “knowingly permitted” by the owner:  The contractor should determine at the outset whether the person engaging his services is the owner of the real estate, or is knowingly permitted by the owner to make improvements. The best practice is to determine (by a current title commitment or title search) the identity of the owner of the real estate, and require the owner to join in the construction contract. If the person entering into the contract is not the record owner of the property, then his authority to enter into the contract must be determined. The following rules apply:
  
  
  
  • Land Trusts:  If the property is held in a land trust, the trustee should sign the contract, or the contractor should get a statement from the land trustee disclosing the names of the beneficiaries, and the beneficiaries should sign the contract.
  • Landlords and Contract Sellers:  The “owner” of rented property is the landlord, and the “record owner” of property being sold under a land contract is the contract seller. Most leases and land contracts forbid the tenant or buyer from making improvements which would create mechanic’s liens. Therefore, the contractor should require the landlord or contract seller to consent in writing to the contract on rented property, or property being sold under a land contract.
  • Real Estate Developers:  Often the developer is not the owner of the land. The contractor should require that the owner consent in writing to the contract.
  • Married Persons:  Where one spouse (i.e., the wife) holds title to the property, and the other spouse (i.e., the husband) enters into the construction contract, the contractor claiming a mechanic’s lien would have to prove that the spouse holding title knowingly permitted the other spouse to make the improvements. It is therefore best to require both spouses to sign the contract.
  
  
  
• The contractor must furnish materials or services:  The types of “materials or services” which must be furnished to create a contractor’s lien are specifically described in the mechanic’s lien statute. The statute is very detailed, and almost all types of materials or services used in construction are included.
• Performance of the contract:  The contractor must complete work under the contract, or show a valid excuse for non performance.
• Sworn Contractor’s Affidavit:  The contractor is not entitled to be paid unless and until he gives the owner a sworn contractor’s statement, and a Notice about subcontractors. Therefore, this step is crucial to both your right to be paid, and your right to claim a mechanic’s lien.
• Record the lien claim:  The contractor must record with the Recorder in the county where the property is located, an “Original Contractor’s Claim for Lien” within four (4) months after the final work was completed. (However, a lien claim recorded within two (2) years is still valid against the owner, but not other creditors.) If not paid sooner, the contractor must also file a lawsuit to foreclose the lien within two (2) years from the completion of the work.

• There must be a valid contract between the general contractor and the owner of the property, or someone “knowingly permitted” by the owner to make improvements. Since the right of a subcontractor to claim a lien depends on the contract between the owner and the general contractor, the subcontractor should be aware that the general contractor must have a contract with the owner, or someone “knowingly permitted” by the owner to make improvements (discussed above).
• The subcontractor must have a contract with the original contractor. Again, although a verbal contract may be acceptable, it is much better to have a written contract, with all the terms clearly stated.
• The subcontractor must furnish certain materials or services. Almost any type of materials or services used in the construction industry is included.
• The subcontractor must complete the contract, or have a valid excuse, beyond his control, for not completing the work.
• Finally, the subcontractor must serve, and file, notice of his claim for lien as described below:
  
  
  • FOR EXISTING, OWNER-OCCUPIED, SINGLE FAMILY RESIDENCE:  The subcontractor must notify the occupant owner by certified mail, return receipt requested, addressed to the occupant owner at his residence, WITHIN 14 DAYS FROM HIS FIRST FURNISHING MATERIALS OR LABOR, that he is supplying materials or labor. The notice must state the name and address of the subcontractor (or material supplier), the date he first performed labor or services or furnished materials, the type of work done or to be done (or materials delivered or to be delivered), and the name of the contractor who hired him. The notice must contain the following warning in bold type:
    
    
    NOTICE TO OWNER
    
    Do not pay the Contractor for this work or material delivered unless you have received from the Contractor a waiver of lien by, or other satisfactory evidence of payment to, the Subcontractor or Materialman.
    
    
  • 90 DAY NOTICE OF SUBCONTRACTOR’S LIEN:  A subcontractor must serve the owner with a written notice of his claim within ninety (90) days after the date of completion of his work. This notice must be served on the owner of record (as shown in the Recorder’s Office), or on the owner’s architect, agent or superintendent; and it must be served either in person, or sent by “Registered or Certified Mail, with Return Receipt Requested, and delivery limited to addressee only....” The notice must also contain the “Notice to Owner” language discussed above.
  • SERVICE ON LENDING INSTITUTION:  The “Notice” must also be served on lenders with mortgages on the property.
  
  
  
• Record Claim for Lien:  Within four (4) months after completion of work, the subcontractor must record a claim for lien in the Recorder’s Office of the county where the land is located. He does not have to wait until he has completed his work, but he must first serve a “Notice of Claim” on the owner and the lending agency, as set forth above, and wait ten (10) days after that service.
• File Suit Within Two Years:  If still not paid, the subcontractor must file suit within two (2) years after he has completed his work.

NOTICE

This web page and the information contained herein may constitute advertising material under the Illinois Rules of Professional Conduct.

The firm brochures provided by Smith, Landmeier & Elders, P.C. are intended to provide general information on various areas of the law. They are not to be relied upon for specific legal advice. Transmission or receipt of this information is not intended to create an attorney-client relationship. Any specific legal questions or issues should be handled by a competent attorney.