Ready for the Illinois Lien Law Changes?
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The Illinois Mechanics Lien Act is a powerful, money collection tool for general contractors, subcontractors and material suppliers who provide labor or materials for the construction of improvements on private projects. A new section of the Illinois Mechanics Lien Act will become effective January 1, 2016. This new provision allows for lien’s filed against real estate to be lifted or “bonded over.” This essentially means that after a lien has been filed with a court, one of the many interested parties can obtain a bond that essentially removes the lien from the real property, and then attaches the lien to the bond . Surprisingly, Illinois is one of the last states to adopt such a provision.
Many different opinions exist on whether this is good or bad. Regardless of where your thoughts are on the matter, if you’re in the construction business there are a few things you should be doing to prepare for this change. As we’re not legal professionals, we encourage everyone to obtain advice from legal counsel on the changes to ensure protection of your interests.
Certainly any contracting entity that’s writing contracts to subcontractors and suppliers should look at their indemnity clause as it relates to liens. The idea is to drive the “bond over” requirement to the level of the dispute. Without it, you could find yourself having to post a bond and accept liability of a subcontractor that’s involved in a dispute with their sub or supplier.
Consult with your attorney to develop proper contract language to hold your company harmless against costs, et al, related to a mechanics lien filed by a party that downstream sub or supplier is contractually responsible for. Further, draft language that upon demand, they must file the bond to remove the lien and pay the premium.
If you find yourself on the other side of this new provision, and now in lieu of your lien against the property (and the leverage that goes with it) you find that your new guarantee is a surety bond, please consult an attorney so you know your rights. There are benefits to having this right against a bond in lieu of real property, but timelines and certain legal maneuvers will be necessary to perfect your position. Ensure your company is proactive and prepared for these changes.
For additional questions, contact an ‘A’ Team expert today.
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