Bill Text: IL SB3023 | 2013-2014 | 98th General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Mechanics Lien Act. Provides that an agreement to subordinate a lien under the Act where the agreement is in anticipation of and in consideration for the awarding of a contract or subcontract, either express or implied, to perform work or supply materials for an improvement upon real property is against public policy and unenforceable. Deletes language providing that certain subordination provisions of contracts is not binding on the subcontractor unless set forth in its entirety in writing in the contract between the contractor and subcontractor or material supplier. Makes corresponding changes.

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Passed) 2014-07-16 - Public Act . . . . . . . . . 98-0764 [SB3023 Detail]

Download: Illinois-2013-SB3023-Introduced.html

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98TH GENERAL ASSEMBLY State of Illinois 2013 and 2014 SB3023 Introduced 2/7/2014, by Sen. John G. Mulroe SYNOPSIS AS INTRODUCED:
770 ILCS 60/1 from Ch. 82, par. 1
770 ILCS 60/21 from Ch. 82, par. 21
Amends the Mechanics Lien Act. Provides that an agreement to subordinate a lien under the Act where the agreement is in anticipation of and in consideration for the awarding of a contract or subcontract, either express or implied, to perform work or supply materials for an improvement upon real property is against public policy and unenforceable. Deletes language providing that certain subordination provisions of contracts is not binding on the subcontractor unless set forth in its entirety in writing in the contract between the contractor and subcontractor or material supplier. Makes corresponding changes.
LRB098 17607 HEP 52719 b
A BILL FOR
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AN ACT concerning civil law.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Mechanics Lien Act is amended by changing
Sections 1 and 21 as follows:
(770 ILCS 60/1) (from Ch. 82, par. 1)
Sec. 1. Contractor defined; amount of lien; waiver of lien;
attachment of lien; agreement to waive; when not enforceable.
(a) Any person who shall by any contract or contracts,
express or implied, or partly expressed or implied, with the
owner of a lot or tract of land, or with one whom the owner has
authorized or knowingly permitted to contract, to improve the
lot or tract of land or for the purpose of improving the tract
of land, or to manage a structure under construction thereon,
is known under this Act as a contractor and has a lien upon the
whole of such lot or tract of land and upon adjoining or
adjacent lots or tracts of land of such owner constituting the
same premises and occupied or used in connection with such lot
or tract of land as a place of residence or business; and in
case the contract relates to 2 or more buildings, on 2 or more
lots or tracts of land, upon all such lots and tracts of land
and improvements thereon for the amount due to him or her for
the material, fixtures, apparatus, machinery, services or

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labor, and interest at the rate of 10% per annum from the date
the same is due. This lien extends to an estate in fee, for
life, for years, or any other estate or any right of redemption
or other interest that the owner may have in the lot or tract
of land at the time of making such contract or may subsequently
acquire and this lien attaches as of the date of the contract.
(b) As used in subsection (a) of this Section, "improve"
means to furnish labor, services, material, fixtures,
apparatus or machinery, forms or form work in the process of
construction where cement, concrete or like material is used
for the purpose of or in the building, altering, repairing or
ornamenting any house or other building, walk or sidewalk,
whether the walk or sidewalk is on the land or bordering
thereon, driveway, fence or improvement or appurtenances to the
lot or tract of land or connected therewith, and upon, over or
under a sidewalk, street or alley adjoining; or fill, sod or
excavate such lot or tract of land, or do landscape work
thereon or therefor; or raise or lower any house thereon or
remove any house thereto, or remove any house or other
structure therefrom, or perform any services or incur any
expense as an architect, structural engineer, professional
engineer, land surveyor or property manager in, for or on a lot
or tract of land for any such purpose; or drill any water well
thereon; or furnish or perform labor or services as
superintendent, time keeper, mechanic, laborer or otherwise,
in the building, altering, repairing or ornamenting of the

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same; or furnish material, fixtures, apparatus, machinery,
labor or services, forms or form work used in the process of
construction where concrete, cement or like material is used,
or drill any water well on the order of his agent, architect,
structural engineer or superintendent having charge of the
improvements, building, altering, repairing or ornamenting the
same.
(c) The taking of additional security by the contractor or
sub-contractor is not a waiver of any right of lien which he
may have by virtue of this Act, unless made a waiver by express
agreement of the parties and the waiver is not prohibited by
this Act.
(d) An agreement to waive any right to enforce or claim a
lien or an agreement to subordinate any lien under this Act
where the agreement is in anticipation of and in consideration
for the awarding of a contract or subcontract, either express
or implied, to perform work or supply materials for an
improvement upon real property is against public policy and
unenforceable. This Section does not prohibit release of lien
under subsection (b) of Section 35 of this Act or prohibit
subordination of the lien, except as provided in Section 21.
(Source: P.A. 94-627, eff. 1-1-06.)
(770 ILCS 60/21) (from Ch. 82, par. 21)
Sec. 21. Sub-contractor defined; lien of sub-contractor;
notice; size of type; service of notice; amount of lien;

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default by contractor.
(a) Subject to the provisions of Section 5, every mechanic,
worker or other person who shall furnish any labor, services,
material, fixtures, apparatus or machinery, forms or form work
for the contractor, or shall furnish any material to be
employed in the process of construction as a means for
assisting in the erection of the building or improvement in
what is commonly termed form or form work where concrete,
cement or like material is used in whole or in part, shall be
known under this Act as a sub-contractor, and shall have a lien
for the value thereof, with interest on such amount from the
date the same is due, from the same time, on the same property
as provided for the contractor, and, also, as against the
creditors and assignees, and personal and legal
representatives of the contractor, on the material, fixtures,
apparatus or machinery furnished, and on the moneys or other
considerations due or to become due from the owner under the
original contract.
(b) If the legal effect of any contract between the owner
and contractor is that no lien or claim may be filed or
maintained by any one and the waiver is not prohibited by this
Act, or that such contractor's lien shall be subordinated to
the interests of any other party, and the provision is not
prohibited by this Act, such provision shall be binding; but
the only admissible evidence thereof as against a subcontractor
or material supplier, shall be proof of actual notice thereof

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to him or her before his or her contract is entered into. Such
subordination provision shall not be binding on the
subcontractor unless set forth in its entirety in writing in
the contract between the contractor and subcontractor or
material supplier.
(c) It shall be the duty of each subcontractor who has
furnished, or is furnishing, labor, services, material,
fixtures, apparatus or machinery, forms or form work for an
existing owner-occupied single family residence, in order to
preserve his lien, to notify the occupant either personally or
by certified mail, return receipt requested, addressed to the
occupant or his agent of the residence within 60 days from his
first furnishing labor, services, material, fixtures,
apparatus or machinery, forms or form work, that he is
supplying labor, services, material, fixtures, apparatus or
machinery, forms or form work provided, however, that any
notice given after 60 days by the subcontractor shall preserve
his lien, but only to the extent that the owner has not been
prejudiced by payments made prior to receipt of the notice. The
notification shall include a warning to the owner that before
any payment is made to the contractor, the owner should receive
a waiver of lien executed by each subcontractor who has
furnished labor, services, material, fixtures, apparatus or
machinery, forms or form work.
The notice shall contain the name and address of the
subcontractor or material man, the date he started to work or

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to deliver materials, the type of work done and to be done or
the type of materials delivered and to be delivered, and the
name of the contractor requesting the work. The notice shall
also contain the following warning:
"NOTICE TO OWNER
The subcontractor providing this notice has performed work
for or delivered material to your home improvement contractor.
These services or materials are being used in the improvements
to your residence and entitle the subcontractor to file a lien
against your residence if the services or materials are not
paid for by your home improvement contractor. A lien waiver
will be provided to your contractor when the subcontractor is
paid, and you are urged to request this waiver from your
contractor when paying for your home improvements."
Such warning shall be in at least 10 point bold face type.
For purposes of this Section, notice by certified mail is
considered served at the time of its mailing.
(d) In no case, except as hereinafter provided, shall the
owner be compelled to pay a greater sum for or on account of
the completion of such house, building or other improvement
than the price or sum stipulated in said original contract or
agreement, unless payment be made to the contractor or to his
order, in violation of the rights and interests of the persons
intended to be benefited by this Act: Provided, if it shall
appear to the court that the owner and contractor fraudulently,
and for the purpose of defrauding sub-contractors fixed an

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unreasonably low price in their original contract for the
erection or repairing of such house, building or other
improvement, then the court shall ascertain how much of a
difference exists between a fair price for labor, services,
material, fixtures, apparatus or machinery, forms or form work
used in said house, building or other improvement, and the sum
named in said original contract, and said difference shall be
considered a part of the contract and be subject to a lien. But
where the contractor's statement, made as provided in Section
5, shows the amount to be paid to the sub-contractor, or party
furnishing material, or the sub-contractor's statement, made
pursuant to Section 22, shows the amount to become due for
material; or notice is given to the owner, as provided in
Sections 24 and 25, and thereafter such sub-contract shall be
performed, or material to the value of the amount named in such
statements or notice, shall be prepared for use and delivery,
or delivered without written protest on the part of the owner
previous to such performance or delivery, or preparation for
delivery, then, and in any of such cases, such sub-contractor
or party furnishing or preparing material, regardless of the
price named in the original contract, shall have a lien
therefor to the extent of the amount named in such statements
or notice. In case of default or abandonment by the contractor,
the sub-contractor or party furnishing material, shall have and
may enforce his lien to the same extent and in the same manner
that the contractor may under conditions that arise as provided

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for in Section 4 of this Act, and shall have and may exercise
the same rights as are therein provided for the contractor.
(e) Any provision in a contract, agreement, or
understanding, when payment from a contractor to a
subcontractor or supplier is conditioned upon receipt of the
payment from any other party including a private or public
owner, shall not be a defense by the party responsible for
payment to a claim brought under Section 21, 22, 23, or 28 of
this Act against the party. For the purpose of this Section,
"contractor" also includes subcontractor or supplier. The
provisions of Public Act 87-1180 shall be construed as
declarative of existing law and not as a new enactment.
(Source: P.A. 94-615, eff. 1-1-06; 94-627, eff. 1-1-06.)