Bill Amendment: IL HB5201 | 2017-2018 | 100th General Assembly

NOTE: For additional amemendments please see the Bill Drafting List

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Bill Title: MECHANICS LIEN DEMAND & REFER

Status: 2018-08-24 - Public Act . . . . . . . . . 100-1061 [HB5201 Detail]

Download: Illinois-2017-HB5201-Senate_Amendment_001.html

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Sen. Cristina Castro

Filed: 5/17/2018

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AMENDMENT TO HOUSE BILL 5201
AMENDMENT NO. ______. Amend House Bill 5201 by replacing
everything after the enacting clause with the following:
"Section 5. The Counties Code is amended by adding Sections
3-5010.8, 5-41065, and 5-43043 as follows:
(55 ILCS 5/3-5010.8 new)
Sec. 3-5010.8. Mechanics lien demand and referral pilot
program.
(a) Legislative findings. The General Assembly finds that
expired mechanics liens on residential property, which cloud
title to property, are a rapidly growing problem throughout the
State. In order to address the increase in expired mechanics
liens and, more specifically, those that have not been released
by the lienholder, a recorder may establish a process to demand
and refer mechanics liens that have been recorded but not
litigated or released in accordance with the Mechanics Lien Act

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to an administrative law judge for resolution or demand that
the lienholder commence suit or forfeit the lien.
(b) Definitions. As used in this Section:
"Demand to Commence Suit" means the written demand
specified in Section 34 of the Mechanics Lien Act.
"Mechanics lien" and "lien" are used interchangeably in
this Section.
"Notice of Expired Mechanics Lien" means the notice a
recorder gives to a property owner under subsection (d)
informing the property owner of an expired lien.
"Notice of Referral" means the document referring a
mechanics lien to a county's code hearing unit.
"Recording" and "filing" are used interchangeably in this
Section.
"Referral" or "refer" means a recorder's referral of a
mechanics lien to a county's code hearing unit to obtain a
determination as to whether a recorded mechanics lien is valid.
"Residential property" means real property improved with
not less than one nor more than 4 residential dwelling units; a
residential condominium unit, including, but not limited to,
the common elements allocated to the exclusive use of the
condominium unit that form an integral part of the condominium
unit and any parking unit or units specified by the declaration
to be allocated to a specific residential condominium unit; or
a single tract of agriculture real estate consisting of 40
acres or less that is improved with a single-family residence.

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If a declaration of condominium ownership provides for
individually owned and transferable parking units,
"residential property" does not include the parking unit of a
specified residential condominium unit unless the parking unit
is included in the legal description of the property against
which the mechanics lien is recorded.
"Subcontractor" has the meaning given to that term in
subsection (a) of Section 21 of the Mechanics Lien Act.
(c) Establishment of a mechanics lien demand and referral
process. After a public hearing, a recorder in a county with a
code hearing unit may adopt rules establishing a mechanics lien
demand and referral process for residential property. A
recorder shall provide public notice 90 days before the public
hearing. The notice shall include a statement of the recorder's
intent to create a mechanics lien demand and referral process
and shall be published in a newspaper of general circulation in
the county and, if feasible, be posted on the recorder's
website and at the recorder's office or offices.
(d) Notice of Expired Lien. If a recorder determines, after
review by legal staff or counsel, that a mechanics lien
recorded in the grantor's index or the grantee's index is an
expired lien, the recorder shall serve a Notice of Expired Lien
by certified mail to the last known address of the owner. The
owner or legal representative of the owner of the residential
property shall confirm in writing his or her belief that the
lien is not involved in pending litigation and, if there is no

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pending litigation, as verified and confirmed by county court
records, the owner may request that the recorder proceed with a
referral or serve a Demand to Commence Suit.
For the purposes of this Section, a recorder shall
determine a lien is an expired lien if the lien fits into one
of the following classifications:
(1) unenforced (if a suit to enforce the lien has not
been commenced by the lienholder or a counterclaim has not
been filed (within 2 years after the completion date of the
contract as specified in the recorded mechanics lien, the
completion of extra or additional work, or furnishing of
extra or additional material under Section 9 of the
Mechanics Lien Act) and if an automatic stay under Section
362(a) of the United States Bankruptcy Code does not
prohibit a suit or counterclaim to foreclose; if a
completion date is not specified in the recorded lien,
then, as provided under Section 6 of the Mechanics Lien
Act: (A) if the work is done or material is furnished
within 3 years from the commencement of the work or the
commencement of furnishing the material in the case of work
done or material furnished as to residential property; or
(B) if no later than 5 years from the commencement of the
work or the commencement of furnishing the material in the
case of work done or material furnished as to any other
type of property and if an automatic stay under Section
362(a) of the United States Bankruptcy Code does not

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prohibit a suit or counterclaim to foreclose); or
(2) failure to record a satisfaction or release (if the
lienholder has failed to fulfill the requirements of
subsection (a) of Section 35 of the Mechanics Lien Act).
(e) Demand to Commence Suit. Upon receipt of an owner's
confirmation that the lien is not involved in pending
litigation and a request for the recorder to serve a Demand to
Commence Suit, the recorder shall serve a Demand to Commence
Suit on the lienholder of the expired lien as provided in
Section 34 of the Mechanics Lien Act. A recorder may request
that the Secretary of State assist in providing registered
agent information or obtain information from the Secretary of
State's registered business database when the recorder seeks to
serve a Demand to Commence suit on the lienholder. Upon
request, the Secretary of State, or his or her designee, shall
provide the last known address or registered agent information
for a lienholder who is incorporated or doing business in the
State. The recorder must record a copy of the Demand to
Commence suit in the grantor's index or the grantee's index
identifying the mechanics lien and include the corresponding
document number and the date of demand. The recorder may, at
his or her discretion, notify the Secretary of State regarding
a Demand to Commence suit determined to involve a company,
corporation, or business registered with that office.
When the lienholder commences a suit or files an answer
within 30 days or the lienholder records a release of lien with

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the county recorder as required by subsection (a) of Section 34
of the Mechanics Lien Act, then the demand and referral process
is completed for the recorder for that property.
(f) Referral. Upon receipt of an owner's confirmation that
the lien is not involved in pending litigation and a request
for the recorder to proceed with a referral, the recorder
shall: (i) file the Notice of Referral with the county's code
hearing unit; (ii) identify and notify the lienholder by
telephone, if available, of the referral and send a copy of the
Notice of Referral by certified mail to the lienholder using
information included in the recorded mechanics lien or the last
known address or registered agent received from the Secretary
of State or obtained from the Secretary of State's registered
business database; (iii) send a copy of the Notice of Referral
by mail to the physical address of the property owner
associated with the lien; and (iv) record a copy of the Notice
of Referral in the grantor's index or the grantee's index
identifying the mechanics lien and include the corresponding
document number. The Notice of Referral shall clearly identify
the person, persons, or entity believed to be the owner,
assignee, successor, or beneficiary of the lien. The recorder
may, at his or her discretion, notify the Secretary of State
regarding a referral determined to involve a company,
corporation, or business registered with that office.
No later than 30 business days after receipt of the Notice
of Referral, the code hearing unit shall schedule a hearing to

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occur no later than 30 days after receiving the referral.
Notice of the hearing shall be provided by the county recorder,
by and through his or her representative, to the filer, or the
party represented by the filer, of the expired lien, the legal
representative of the recorder of deeds who referred the case,
and the last owner of record, as identified in the Notice of
Referral.
If the recorder shows by clear and convincing evidence that
the lien in question is an expired lien, the administrative law
judge shall rule the lien is forfeited under Section 34.5 of
the Mechanics Lien Act and that the lien no longer affects the
chain of title of the property in any way. The judgment shall
be forwarded to all parties identified in this subsection. Upon
receiving judgment of a forfeited lien, the recorder shall,
within 5 business days, record a copy of the judgment in the
grantor's index or the grantee's index.
If the administrative law judge finds the lien to be valid
and still within the statutorily prescribed period of time to
remain as an active lien in the property's chain of title, the
recorder shall, no later than 5 business days after receiving
notice of the decision of the administrative law judge, record
a copy of the judgment in the grantor's index or the grantee's
index.
A decision by an administrative law judge is reviewable
under the Administrative Review Law, and nothing in this
Section precludes a property owner or lienholder from

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proceeding with a civil action to resolve questions concerning
a mechanics lien.
A lienholder or property owner may remove the action from
the code hearing unit to the circuit court as provided in
subsection (i).
(g) Final administrative decision. The recorder's decision
to refer a mechanics lien or serve a Demand to Commence Suit is
a final administrative decision that is subject to review under
the Administrative Review Law by the circuit court of the
county where the real property is located. The standard of
review by the circuit court shall be consistent with the
Administrative Review Law.
(h) Liability. A recorder and his or her employees or
agents are not subject to personal liability by reason of any
error or omission in the performance of any duty under this
Section, except in the case of willful or wanton conduct. The
recorder and his or her employees or agents are not liable for
the decision to refer a lien or serve a Demand to Commence
Suit, or failure to refer or serve a Demand to Commence Suit,
of a lien under this Section.
(i) Private actions; use of demand and referral process.
Nothing in this Section precludes a private right of action by
any party with an interest in the property affected by the
mechanics lien or a decision by the code hearing unit. Nothing
in this Section requires a person or entity who may have a
mechanics lien recorded against his or her property to use the

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mechanics lien demand and referral process created by this
Section.
A lienholder or property owner may remove a matter in the
referral process to the circuit court at any time prior to the
final decision of the administrative law judge by delivering a
certified notice of the suit filed in the circuit court to the
administrative law judge. Upon receipt of the certified notice,
the administrative law judge shall dismiss the matter without
prejudice. If the matter is dismissed due to removal, then the
demand and referral process is completed for the recorder for
that property. If the circuit court dismisses the removed
matter without deciding on whether the lien is expired and
without prejudice, the recorder may reinstitute the demand and
referral process under subsection (d).
(j) Repeal. This Section is repealed on January 1, 2022.
(55 ILCS 5/5-41065 new)
Sec. 5-41065. Mechanics lien demand and referral
adjudication.
(a) Notwithstanding any other provision in this Division, a
county's code hearing unit must adjudicate an expired mechanics
lien referred to the unit under Section 3-5010.8.
(b) If a county does not have an administrative law judge
in its code hearing unit who is familiar with the areas of law
relating to mechanics liens, one may be appointed no later than
3 months after the effective date of this amendatory Act of the

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100th General Assembly to adjudicate all referrals concerning
mechanics liens under Section 3-5010.8.
(c) If an administrative law judge familiar with the areas
of law relating to mechanics liens has not been appointed as
provided subsection (b) when a mechanics lien is referred under
Section 3-5010.8 to the code hearing unit, the case shall be
removed to the proper circuit court with jurisdiction.
(d) This Section is repealed on January 1, 2022.
(55 ILCS 5/5-43043 new)
Sec. 5-43043. Mechanics lien demand and referral
adjudication.
(a) Notwithstanding any other provision in this Division, a
county's code hearing unit must adjudicate an expired mechanics
lien referred to the unit under Section 3-5010.8.
(b) If a county does not have an administrative law judge
in its code hearing unit who is familiar with the areas of law
relating to mechanics liens, one may be appointed no later than
3 months after the effective date of this amendatory Act of the
100th General Assembly to adjudicate all referrals concerning
mechanics liens under Section 3-5010.8.
(c) If an administrative law judge familiar with the areas
of law relating to mechanics liens has not been appointed as
provided subsection (b) when a mechanics lien is referred under
Section 3-5010.8 to the code hearing unit, the case shall be
removed to the proper circuit court with jurisdiction.

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(d) This Section is repealed on January 1, 2022.
Section 10. The Mechanics Lien Act is amended by changing
Section 34 and adding Section 34.5 as follows:
(770 ILCS 60/34) (from Ch. 82, par. 34)
Sec. 34. Notice to commence suit.
(a) Upon written demand of the owner, lienor, a recorder
under Section 3-5010.8 of the Counties Code, or any person
interested in the real estate, or their agent or attorney,
served on the person claiming the lien, or his agent or
attorney, requiring suit to be commenced to enforce the lien or
answer to be filed in a pending suit, suit shall be commenced
or answer filed within 30 days thereafter, or the lien shall be
forfeited. Such service may be by registered or certified mail,
return receipt requested, or by personal service.
(b) A written demand under this Section must contain the
following language in at least 10 point bold face type:
"Failure to respond to this notice within 30 days after
receipt, as required by Section 34 of the Mechanics Lien Act,
shall result in the forfeiture of the referenced lien."
(Source: P.A. 97-1165, eff. 2-11-13.)
(770 ILCS 60/34.5 new)
Sec. 34.5. Mechanics lien administrative adjudication.
(a) Notwithstanding any other provision in this Act, a

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county's code hearing unit may adjudicate the validity of a
mechanics lien under Section 3-5010.8 of the Counties Code. If
the recorder shows by clear and convincing evidence that the
lien being adjudicated is an expired lien, the administrative
law judge shall rule the lien is forfeited under this Act and
that the lien no longer affects the chain of title of the
property in any way.
(b) This Section is repealed on January 1, 2022.".