The Illinois Mechanics Lien Act (“Act”), 770 ILCS 60, serves as a powerful tool for contractors and subcontractors who seek payment for labor and materials furnished to improve a property. While the Act (in conjunction with interpretive case law) also provides useful guidelines for whether contractors may assert a single statement claim (“blanket lien”) against multiple lots under the same contract (rather than the need to apportion the total claim between multiple lots or parcels), a misapplication of those guidelines can invalidate the lien and make it unenforceable. As such, before planning to file a lien against a property with multiple lots or tracts of land, a claimant must have a clear understanding of how the Act’s stringent time limitations might impact the decision as to whether a blanket or an apportioned lien claim is filed.
This article is not intended to cover all potential considerations as to whether a blanket lien claim or an apportioned lien claim should be filed. Rather, the purpose of this article is to provide a general understanding and examples of considerations that potentially impact whether a blanket lien claim or apportioned lien claim is filed.
Requirements For A Valid Lien Under The Illinois Mechanics Lien Act
Section 7 of the Act provides that a valid verified lien “shall consist of a brief statement of the claimant’s contract, the balance due after allowing all credits, and a sufficiently correct description of the lot, lots or tracts of land to identify the same.” Section 1 of the Act, in part, addresses various circumstances under which a single, blanket (i.e., non-apportioned) lien claim can attach to more than just one single parcel or tract of land:
[A] contractor … 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 … from the date the same is due.
770 ILCS 60/1(emphasis added).
- Blanket Liens Contemplated By Section 1 Of The Act
Rarely, if ever, are two projects identical. Sections 1 and 7(b) contemplate at least five different scenarios where a contractor asserts a lien against an owner’s property pertaining to the same, single contract. Section 1 contemplates the following potential scenarios:
(1) Improvements are made to only one lot or tract of land (“Scenario 1”);
(2) Improvements are made to only one lot or tract of land, but the improvements made on that tract of land are: (a) part of the same “premises” of the owner that extend onto other adjacent lots (even if the claimant’s improvements themselves were not made on those adjacent lots); and (b) that same “premises” extending onto the adjacent lots is also occupied or used as a place of residence or business (“Scenario 2”);
(3) Improvements are made to more than one set of adjacent lots or tracts of land, and the improvements made on those adjacent tracts of land are: (a) part of the same “premises” of the owner that extend onto those multiple, adjacent lots; and (b) the same “premises” extending onto the adjacent lots is occupied or used as a place of residence or business (“Scenario 3”); and
(4) Improvements are made to 2 or more buildings that are located on 2 or more lots or tracts of land (Section 1 of the Act does not specifically reference these 2 or more buildings on 2 or more lots or tracts of land as being adjacent or non-adjacent, but the Schmidt v. Anderson and Connelly opinions below addressed four separate buildings on four separate, non-adjacent lots) (“Scenario 4”).
Additionally, Section 7(b) of the Act provides that for a claim involving materials only (and not including labor) for a number of buildings under a contract between the same parties, if the claimant can establish that the materials were in good faith delivered to one of several buildings, or to the owner or his or her agent, for the purpose of being used in the construction of any one or all such buildings falling under the same contract, then the lien shall attach to all of said buildings, together with the associated parcels or tracts, the same as in a single building or improvement. (“Scenario 5”).
Regardless of which of these foregoing scenarios may apply, a contractor must, nevertheless, timely record the lien claim (i.e., within four months of the completion of claimant’s work) or file suit in order for the claim to remain valid and enforceable against third parties (such as mortgagees, innocent third party purchasers of the parcel(s) in question, etc.). Specifically, Section 7(a) requires that:
No contractor shall be allowed to enforce such lien against or to the prejudice of any other creditor or incumbrancer or purchaser, unless within 4 months after completion… he or she shall either bring an action to enforce his or her lien therefor or shall file in the office of the recorder of the county in which the building, erection or other improvement to be charged with the lien is situated, a claim for lien….”
770 ILCS 60/7(a) (emphasis added). However, Section 7 itself does not specifically require that the last date of work be included in the recorded lien claim, nor does Section 7 specify exactly how the four-month requirement applies to each of Scenarios 1 through 5 above.
Because Scenario 1 contemplates that the claimant’s improvements under the contract are all performed upon a single lot or tract of land, the four-month limitation will only apply to one date, i.e., the last date of completion of work on the single lot. (Note that courts have interpreted the completion of work date as the date upon which all work essential to the completion of the contract was furnished, and the four-month period is not tolled by work that is “trivial or inconsequential,” such as work that is in the nature of maintenance or correction of a completed job or punchlist work. See DeAnguera v. Arreguin, 234 N.E.2d 808 (Ill. App. Ct. 1968); Miller Bros. Industrial Sheet Metal Corp. v. LaSalle National Bank, 255 N.E.2d 755 (Ill. App. Ct. 1969); Merchants Environmental Industries v. SLT Realty Ltd. Partnership, 731 N.E.2d 394 (Ill. App. Ct. 2000) (whether or not such work was requested by the owner is another factor to consider)).
However, when improvements relate to or are performed upon multiple lots (or involve two or more buildings located upon two or more lots), Section 7 itself does not specifically elaborate upon how the four-month requirement applies where the last date of completion of work does or does not vary between each lot. Fortunately, the Schmidt and Connelly opinions of the Supreme Court of Illinois, discussed below, provide further guidance on these issues.
- Supreme Court Of Illinois Precedent – Blanket Liens Involving Multiple Lots
In Schmidt v. Anderson, 97 N.E. 291 (1911), the Illinois Supreme Court examined the four-month time limitation under the Act as it related to a blanket lien claim relating to multiple, separate, non-adjoining lots (i.e., Scenario 4 above). By way of background, the contractor (Anderson) made an oral contract with the owner (Schmidt) to install gas fittings, electric wiring, plumbing, and other improvements to four separate houses on four separate lots:
(1) Division St. House: Work completed middle of November, 1907 – lot sold by Schmidt and new deed recorded before November 15, 1907;
(2)&(3) Two Prospect St. Houses: Work completed middle of November, 1907 – lots sold by Schmidt and new deeds recorded before November 15, 1907;
(4) Oak St. House: Work completed March 14, 1908; lot sold by Schmidt and new deed recorded on September 23, 1908.
Schmidt, 97 N.E. at 292. Anderson recorded his blanket lien claim against all four non-adjoining lots on May 14, 1908 (for a combined balance due of $1,751.95), which was: (a) more than four months after all work was completed on the Division St. and Prospect St. Houses; and (b) less than four months after all work was completed on the Oak St. House. The Supreme Court of Illinois, applying Sections 1 and 7 of the Act (which were substantially similar as enacted in 1903 as today in 2019), noted that the legislature amended the Act in 1903 to specifically allow a contractor to file a blanket, single lien claim against separate buildings on lots that were not adjacent to or adjoining each other, where the work was performed or material furnished for all of such buildings under a single contract (which is exactly what Anderson recorded on May 14, 1908). Id.
HOWEVER, the Supreme Court held that while the specific language of the Act itself did not state that the single, blanket lien claim had to be recorded no more than four months after the earliest completed lot (in this case, by no later than mid-March, 1908, but was not in fact recorded until May 14, 1908), the entire purpose of the four-month requirement is to protect the rights of third persons dealing with the property to have notice of the existence of a timely, enforceable lien claim. With this legislative purpose in mind, the Supreme Court of Illinois noted that if Anderson had instead recorded an apportioned lien claim on May 14, 1908 as to the four separate houses on four separate lots, he at least could have enforced a timely lien claim as apportioned to the Oak St. House. [Conversely, had Anderson filed his blanket lien no more than four months after the earliest of the four completion dates, such claim also would have been valid under this alternative scenario]. However, since Anderson’s lien claim was: (a) not apportioned; and (b) was recorded more than four months after the earliest of the four completion dates, there was no way for the court (or third parties) to ascertain what portion of Anderson’s claim was enforceable as to the Oak St. House (which would have been timely per Section 7’s four month requirement), versus those portions that were stale and unenforceable (i.e., were not timely recorded within four months after completion of the work on the remaining three houses). Because the lack of apportionment in Anderson’s blanket lien claim made it impossible to determine what portion of the overall claim for $1,751.95 was timely and enforceable as to the Oak St. House only, Anderson’s entire lien claim was rendered unenforceable. Id.
Over 70 years later, the Supreme Court of Illinois issued its opinion in First Fed. Sav. & Loan Ass’n of Chicago v. Connelly, 454 N.E.2d 314 (1983). The lien claimant (“Rossi”) was a subcontractor to the general contractor (“Connelly”) in connection with the construction of four apartment buildings (i.e., like Schmidt, analogous to Scenario 4) above). Rossi furnished and installed wall-to-wall carpeting in all four apartment buildings, and filed a single, blanket lien claim for $12,102.00 as to all four apartment buildings on June 3, 1980. Rossi’s lien claim stated that all work was completed on all four of the buildings on or about March 15, 1980, but Rossi’s lien claim did NOT: (a) apportion the $12,102.00 between the four separate buildings; and (b) reference separate completion dates for each of the four apartment buildings. Connelly, 454 N.E.2d at 315-316.
Six weeks after Rossi filed his lien, Plaintiff, First Federal (which held prior mortgages on three of the apartment buildings in question) filed suit to foreclose its mortgage on one of the four buildings, and argued that Rossi’s lien claim was unenforceable as to that particular building, given that the recorded lien claim did not (1) establish whether work was completed on that particular building less than four months before the lien recording date; and (2) apportion the overall claim for $12,102.00 between the four separate buildings. Id. at 316.
Notwithstanding its prior opinion in Schmidt, the Supreme Court of Illinois held that Rossi’s blanket lien claim did in fact comply with Section 7 of the Act. The court first noted that nothing in the lien claim itself suggested that work was completed on the building in question (or on any of the other three buildings) any later than March 15, 1980, nor did First Federal offer any other evidence showing that Rossi’s work was in fact completed on the apartment building in question more than four months prior to the lien recording date (June 3, 1980). Id. at 316-317. In Schmidt, however, there WAS evidence showing that work was completed on several of the four houses/four lots more than four months before the recording of the single, non-apportioned blanket lien claim. Id. at 317-318. The absence of such information in Connelly, combined with the failure of Section 7 to specifically require the inclusion of separate completion dates for all lots in a recorded lien claim, provided sufficient grounds for the Supreme Court of Illinois to reach a completely different holding as compared to the blanket lien claim rejected in Schmidt. Id. The Connelly court then held that Schmidt does not mandate a per se rule requiring apportionment of a lien claim anytime multiple properties are involved, and it limited its prior holding in Schmidt to the “circumstances analogous to the facts of that case.” Id. at 318. Given the lack of evidence that any of Rossi’s work on any of the four separate apartment buildings was completed more than four months before June 3, 1980, there was no reason to believe that any third parties’ rights (i.e., First Federal’s) were prejudiced (as First Federal received actual or constructive notice of Rossi’s lien claim in a timely fashion, i.e., less than four months after completion on the apartment building in question). Id. at 318-319.
Although Section 7 itself does not specifically require that the lien claim reference a last date of work in the recorded lien claim itself, the practitioner must nevertheless be cognizant of two subsequent, conflicting opinions from the Appellate Court of Illinois, namely:
(1) First District: Merchants Envtl. Indus., Inc. v. SLT Realty Ltd. P’ship, 314 Ill. App. 3d 848, 731 N.E.2d 394 (Ill. App. Ct. 2000) (whereby the Appellate Court, First District, held that while Section 7 of the Act itself does not specifically require the inclusion of a last date of work, such a requirement nevertheless must be inferred, as the legislative purpose of the four month requirement is to allow third parties to learn from reading the recorded lien claim itself as to whether it is enforceable); and
(2) Second District: Nat’l City Mortg. v. Bergman, 405 Ill. App. 3d 102, 939 N.E.2d 1 (2010) (whereby the Appellate Court, Second District, held that the Supreme Court of Illinois’s opinion in Connelly stated that strict construction of the Act’s requirements only applies to requirements that are specifically included in the language of the Act itself, and therefore, the absence of such language in Section 7 means that the claimant does not need to include the last date of work in the recorded claim).
The Appellate Court of Illinois is comprised of five separate districts, and a given district is not required to follow the decisions of its sister districts, or even its own prior decisions. Natl’s City, 939 N.E.2d at 6. However, in the event that there are conflicting opinions between the various appellate districts (where the Supreme Court of Illinois has not yet addressed the legal issue in question), a trial court in Illinois is required to either: (1) follow the precedent established by whichever appellate district it sits in; or (2) if there is no precedent in the appellate district that it sits in, it must follow the precedent otherwise established by the Appellate Court of Illinois’ various other districts. Rein v. State Farm Mut. Auto. Ins. Co., 945 N.E.2d 94, 101-102 (Ill. App. Ct. 2011). Where the Appellate Court’s pronouncements on an issue are unsettled, or express conflicting views, a party cannot rely upon only one of those conflicting views and ignore the other views. See Schmidt v. Ameritech Illinois, 768 N.E.2d 303, 309-310 (Ill. App. Ct. 2002) (citing People v. Granados, 666 N.E.2d 1191 (1996)).
In light of the conflicting authorities of Merchants and Nat’l City, and until the Supreme Court of Illinois resolves this conflict, the safe approach is for the lien claimant to include a last date of work in their Section 7 recorded lien claim (even though this is not currently required for counties and circuit courts sitting within the Second District of the Appellate Court).
Assuming a lien claimant can meet one or more of the foregoing criteria for filing a blanket lien claim, potentially significant sums of investigative costs and attorneys’ fees can be avoided by not having to apportion the claim between multiple lots or tracts of land. However, the claimant is strongly advised to be well-acquainted with the various factors and case law authorities which govern whether a blanket lien claim or an apportioned lien claim, should be filed.
Where a lien claim potentially involves different completion dates for the multiple buildings and/or tracts of land in question, the claimant must: (a) accurately determine exactly when the last dates of work were for each such building or lot; (b) ensure that the Section 7 lien claim is filed within the requisite four-month period vis a vis each separate building/lot and corresponding last date of work (whether filing a blanket lien or apportioned lien claim); and (c) include the last date of work in the recorded Section 7 lien claim itself – particularly if recorded within the boundaries of the First District Appellate Court (and if located in one of the four other appellate districts, consider erring on the side of including (rather than excluding) the last date of work until the Supreme Court of Illinois has resolved this conflict).