Illinois Mechanic’s Lien–Use of Residential Preliminary Notices
Before recording an Illinois mechanic’s lien, subcontractors and suppliers on residential projects are required to serve what is called a “Subcontractor’s Notice to Owner (60-Day Notice)”. It applies only to owner occupied single-family residences and therefore excludes industrial or commercial projects.
Who must use this notice? It applies to all contractors, subcontractors, laborers and material equipment suppliers who do not have a direct contract or privity with the owner of the project. Or alternatively, with the owner’s agent. Included within the definition of “agent” is a construction manager or the spouse of the owner. For example, a general contractor with a contract (it can be verbal or in writing) with the owner who acts as the prime is not required to give the Notice. The Illinois mechanic’s lien statutes define all persons who do not have a direct contract with the owner as “subcontractors” regardless of their license status or the type of work performed.
When must the notice be served? To be valid, the notice is sent even if there is no current delinquency. The Illinois lien claimant has 60 days from first furnishing labor or materials on the project to send out the Notice. But why wait? The best recommendation is to send out the Notice as soon as your contract or proposal is signed and even before the work commences. Note, the owner is only obligated to pay the amount left on the contract between the owner and general contractor. Each time the owner pays the general before receiving such a Notice, the amount of your Illinois mechanic’s lien rights can be proportionately diminished. It is only when the owner receives this Notice that they are obligated to hold back monies from the general. This prevents the owner from paying twice.
Service of the Notice is done by certified mail. And the service is considered accomplished at the time of mailing.
Here is an example that may apply to give you a general idea. Assume there is a general contract with the owner for $100,000. The good news is that you can send out a late notice and it is still valid. The bad news is your lien is reduced by the amount remaining under the prime contractor’s contract. So, if only $10,000 is payable under the contract between the general and the owner, and you are owed $15,000 at the time of sending out the late notice, the most you could ever get on your lien is $10,000.
Service of the Notice is done by certified mail. And the service is considered accomplished at the time of mailing. If you wish assistance in serving this pre-lien notice or recording an Illinois mechanic’s lien, National Lien Law can perform the services.