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A contractor’s costly mistake


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Murray

By Laura Murray

Background
A construction company was hired to restore and reconstruct the homeowner’s residence after it was damaged by a fire.  The homeowners requested that the company provide a list of the subcontractors and material suppliers it had engaged to perform the restoration.  The company failed to do so.  Nonetheless, all of the labor and services were provided in accordance with the contract.  Shortly thereafter, the company recorded its mechanic’s lien.  After payment was not timely tendered, the company filed a complaint.  The homeowners responded by arguing that the mechanic’s lien was void as the company failed to provide them with the requested list of subcontractors and suppliers who performed work or provided materials for the project.

Strict compliance required

The Illinois Mechanics Lien Act requires a general contractor to give an owner a written statement containing the names of all parties furnishing material or labor and the amounts due or the amounts that will become due.  In order to invoke the benefits of the Act, there must be strict compliance with the statutory requirements.

The company argued that because it submitted an affidavit stating that all subcontractors had been paid, it had met its requirements under the Act.  In addition, the company argued that the homeowners were not prejudiced because all of the work on the residence was completed, and, therefore, strict compliance with the Act should be excused.  The company also argued that it would be unfair to lose a mechanic’s lien based upon a technicality that did not affect the homeowners.  

Both the lower court and appeals court disagreed with the company’s arguments and found it was undisputed that the homeowners requested a sworn statement from the construction company and it did not comply with the request.  In the appellate court’s analysis of other cases involving mechanics liens, it found that precedent supported the necessity of strict compliance with the Act. Therefore, the court held even though the homeowners may not have been prejudiced by the company’s failure to provide the requested information, the company’s mechanic’s lien was void due to its noncompliance with the Act’s requirements.

Takeaway

Contractors should be keenly aware of specific state laws regarding mechanics lien. Technical oversights may result in costly mistakes that could have been avoided, otherwise.

 

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