01 Jan 2013
January 1, 2013

Illinois Mechanic’s Lien Act

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by E. Christopher Caravette

Suppose you represent a contractor who furnished labor, services, fixtures, and material to a homeowner, bills the homeowner but is not paid. Also, suppose that the homeowner, after the contractor has completed the job, claims that he never entered into a contract and refuses to pay. There is no written contract between the contractor and the homeowner. At first glance it appears that you will have an uphill battle trying to prove the contractor’s case. However, a careful review of the Illinois Mechanics’ Lien Act (Ill. Rev. Stat., Ch. 82) reveals that, under certain circumstances the contractor may be entitled to relief.

The Mechanics’ Lien Act is the vehicle by which contractors’ affect, preserve, and enforce a lien on real property to which the contractor has furnished labor, services, fixtures or material. The Act’s purpose is to “permit a lien upon premises where a benefit has been received by the owner and where the value or condition of the property has been increased or improved by reason of the furnishing of labor and materials.” Colp v. First Baptist Church of Murphysboro, 341 Ill. 73 (1930). and “to protect those who in good faith furnish material or labor for the construction of buildings or public improvements.” Gunther v. O’Brien Brothers Construction Co., 293 Ill. App. 28, 12 N.E.2d 23 (2nd Dist., 1937).

Creature Of Statute

A mechanics’ lien is entirely a creature of statute, A careful analysis of the Act is necessary before proceeding on behalf of either an owner or a contractor. The Act is far reaching and highly technical. This article discusses one of the many technical aspects of the Act that tends to elude many practitioners representing contractors.

Section 1 of the Act specifically provides that:

Any person who shall by any contract or contracts, expressed or implied, or partly expressed or implied, with the owner a lot or tract of land, or with one whom the owner has authorized knowingly permitted to contract, to improve the lot or tract of land or to manage a structure theron, or to furnish material, fixtures, apparatus, or machinery . . . 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 . . . and improvements thereon for the amount due to him for such material, fixtures, apparatus, machinery, services or labor, and interest from the date the same is due. (Ill. Rev. Stat. Ch. 82, Sec, 1). [Emphasis added]

Though the language of this section is seemingly clear, the words “knowingly permitted to contract” have been the subject of much litigation. As the Act indicates, a contractor may be entitled to a mechanics’ lien on the furnishing of improvements to the property not only if he or she contracts directly with the owner, but also if he or she contracts with one whom the owner has authorized or knowingly permitted to contract. Whether an owner has “knowingly permitted” the improvement to be made depends on the facts of the particular situation.

It is well settled in Illinois that the property owner is presumed to have assented to a contract when owner learns of the contract, permits the work to continue, and accepts the benefits, even if the owner did not originally contract for the improvements. Janisch v. Reynolds, 254 Ill. App. 569 (1st Dist., 1929). In Janisch, the husband of the owner contracted for certain improvements in his wife’s absence and without her knowledge. The contractor brought suit against both the owner and her husband and was granted a mechanic’s lien on the property. The owner appealed, claiming that the mechanic’s lien was improper because the contract was made in her absence and without her knowledge. The court affirmed the finding of a mechanic’s lien, stating that despite the fact that the husband was without the authority from the owner to execute the contract and that the contract was made in the owner’s absence and without her knowledge, the owner was present at the property while the work was being completed and, having failed to protest, the owner assented to the contract.

This line of reasoning follows earlier Illinois decisions that hold that the owner’s presence at the property during the time of the construction is sufficient notice to conclude that the owner “knowingly permitted” the repairs. Loeff v. Meyer, 209 Ill. App. 382 (1st Dist., 1918). In Loeff, a contractor entered into a contract with the lessees of the property for certain alterations and repairs. The owner was not a party to the contract, but did visit the premises on one or two occasions and observed the work being furnished. Though the owner saw the work in progress, she did not protest and allowed the contractor to complete it. At trial, the owner denied liability, but the court held that the owner’s presence at the property was sufficient notice to conclude that the owner “knowingly permitted” the repairs and granted the contractor a mechanics’ lien.

Similarly, in Young v. Bergner, 243 Ill, App.473 (4th Dist., 1927). the court held that a mechanics’ lien was proper even when there was no evidence that the owner had authorized or even had actual notice that repairs were being made to her property. In Young, the owner lived within 200 yards of the property and, though there was no actual notice of the repairs, she was charged with having constructive notice because of the proximity of her residence to the construction.

These cases are a few of the many decisions following the same line of reasoning. They hold that even if an owner of real property does not know of the existence of a contract, if that owner has knowledge of the improvements, allows the improvements to proceed without protest, and accepts the benefits, that owner “knowingly permitted” the contract to be completed and his or her interest should therefore be subject to a mechanics’ lien. See Mutual v. Baker, 237 Ill. App.596 (1st Dist., 1925); Armco Steel Corporation v. LaSalle National Bank, 31 Ill. App.3rd 695, 335 N.E.2d 93 (2nd Dist., 1975).

Finally, in Fettes, Love & Sieben, Inc. v. Simon, 46 Ill. App. 2nd 232, 196 N.E. 2nd 700 (1st Dist., 1964), a plumbing contractor sought to foreclose a mechanic’s lien against an owner and a tenant. The contractor had entered into a contract with the tenant without knowledge. While the work was progressing, the owner’s husband came to the premises to collect a rent check. The tenant advised the owner’s husband of the progress of the work. At trial, the owner claimed that she did not knowingly permit the contract because her husband was not her agent for purposes of the mechanics’ lien statute. The Court agreed and found that the owner’s husband was her agent solely for the purpose of collecting rent, not for purposes of the Act, and therefore his knowledge of the work could not be imputed to her in an effort to impose a mechanics’ lien on the property. This case seems to set a sort of outer limit of liability in mechanics’ lien cases.

Conclusion

In Illinois, a contractor may be entitled to a mechanics’ lien even though that contractor did not contract directly with the owner of the property. It is sufficient if the contractor enters into a contract with a person whom the owner has authorized or has knowingly permitted to contract for the improvements. If the contractor can show that the owner authorized or knowingly permitted the person with whom the contractor contracted, then contractor should be entitled to a mechanics’ lien as a matter of law.

(Note: The information in this article is intended to be general in nature. Plan to discuss your particular circumstances with an attorney for how this might apply to you.)