IMPORTANT NOTICE TO ALL CONSTRUCTION ATTORNEYS

Mechanics Lien Act Amendment Overturns Illinois Supreme Court Decision in Cypress Creek. Effective February 11, 2013, Section 16 of the Mechanics Lien Act was amended to “redistribute the wealth” of those having a claim concerning property through its definition of a “lien creditor”. Prior incumbrances, i.e. mortgages, will have priority over lien creditors, i.e. mechanics lienholders, only to the extent of the value of the land at the time of making the contract for improvements, not to the value of any subsequent improvements at that time. Previously, such incumbrances were preferred to the extent of the value of the land. Each lien creditor has priority to the value of all subsequent improvements regardless of whether erected by the lien creditor. The court has the power to distribute the proceeds and this provision dictates the distribution when the sale proceeds are insufficient to satisfy all claims. 770 ILCS 60/16.

Section 34 of the Act was also amended requiring owners of real estate making written demand to a mechanics lienholder to file suit to include the following warning in the written demand: “the failure to respond to the notice within 30 days after receipt of the notice results in forfeiture of the lien.” 770 ILCS 60/34.

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