HB5201 EnrolledLRB100 18632 AWJ 33857 b

1    AN ACT concerning local government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Counties Code is amended by adding Sections
53-5010.8, 5-41065, and 5-43043 as follows:
 
6    (55 ILCS 5/3-5010.8 new)
7    Sec. 3-5010.8. Mechanics lien demand and referral pilot
8program.
9    (a) Legislative findings. The General Assembly finds that
10expired mechanics liens on residential property, which cloud
11title to property, are a rapidly growing problem throughout the
12State. In order to address the increase in expired mechanics
13liens and, more specifically, those that have not been released
14by the lienholder, a recorder may establish a process to demand
15and refer mechanics liens that have been recorded but not
16litigated or released in accordance with the Mechanics Lien Act
17to an administrative law judge for resolution or demand that
18the lienholder commence suit or forfeit the lien.
19    (b) Definitions. As used in this Section:
20    "Demand to Commence Suit" means the written demand
21specified in Section 34 of the Mechanics Lien Act.
22    "Mechanics lien" and "lien" are used interchangeably in
23this Section.

 

 

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1    "Notice of Expired Mechanics Lien" means the notice a
2recorder gives to a property owner under subsection (d)
3informing the property owner of an expired lien.
4    "Notice of Referral" means the document referring a
5mechanics lien to a county's code hearing unit.
6    "Recording" and "filing" are used interchangeably in this
7Section.
8    "Referral" or "refer" means a recorder's referral of a
9mechanics lien to a county's code hearing unit to obtain a
10determination as to whether a recorded mechanics lien is valid.
11    "Residential property" means real property improved with
12not less than one nor more than 4 residential dwelling units; a
13residential condominium unit, including, but not limited to,
14the common elements allocated to the exclusive use of the
15condominium unit that form an integral part of the condominium
16unit and any parking unit or units specified by the declaration
17to be allocated to a specific residential condominium unit; or
18a single tract of agriculture real estate consisting of 40
19acres or less that is improved with a single-family residence.
20If a declaration of condominium ownership provides for
21individually owned and transferable parking units,
22"residential property" does not include the parking unit of a
23specified residential condominium unit unless the parking unit
24is included in the legal description of the property against
25which the mechanics lien is recorded.
26    (c) Establishment of a mechanics lien demand and referral

 

 

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1process. After a public hearing, a recorder in a county with a
2code hearing unit may adopt rules establishing a mechanics lien
3demand and referral process for residential property. A
4recorder shall provide public notice 90 days before the public
5hearing. The notice shall include a statement of the recorder's
6intent to create a mechanics lien demand and referral process
7and shall be published in a newspaper of general circulation in
8the county and, if feasible, be posted on the recorder's
9website and at the recorder's office or offices.
10    (d) Notice of Expired Lien. If a recorder determines, after
11review by legal staff or counsel, that a mechanics lien
12recorded in the grantor's index or the grantee's index is an
13expired lien, the recorder shall serve a Notice of Expired Lien
14by certified mail to the last known address of the owner. The
15owner or legal representative of the owner of the residential
16property shall confirm in writing his or her belief that the
17lien is not involved in pending litigation and, if there is no
18pending litigation, as verified and confirmed by county court
19records, the owner may request that the recorder proceed with a
20referral or serve a Demand to Commence Suit.
21    For the purposes of this Section, a recorder shall
22determine a lien is an expired lien if the lien is unenforced
23(if a suit to enforce the lien has not been commenced by the
24lienholder or a counterclaim has not been filed (within 2 years
25after the completion date of the contract as specified in the
26recorded mechanics lien, the completion of extra or additional

 

 

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1work, or furnishing of extra or additional material under
2Section 9 of the Mechanics Lien Act; if a completion date is
3not specified in the recorded lien, then the work completion
4date shall be deemed the date of recording of the mechanics
5lien) and if an automatic stay under Section 362(a) of the
6United States Bankruptcy Code does not prohibit a suit or
7counterclaim to foreclose.
8    (e) Demand to Commence Suit. Upon receipt of an owner's
9confirmation that the lien is not involved in pending
10litigation and a request for the recorder to serve a Demand to
11Commence Suit, the recorder shall serve a Demand to Commence
12Suit on the lienholder of the expired lien as provided in
13Section 34 of the Mechanics Lien Act. A recorder may request
14that the Secretary of State assist in providing registered
15agent information or obtain information from the Secretary of
16State's registered business database when the recorder seeks to
17serve a Demand to Commence suit on the lienholder. Upon
18request, the Secretary of State, or his or her designee, shall
19provide the last known address or registered agent information
20for a lienholder who is incorporated or doing business in the
21State. The recorder must record a copy of the Demand to
22Commence suit in the grantor's index or the grantee's index
23identifying the mechanics lien and include the corresponding
24document number and the date of demand. The recorder may, at
25his or her discretion, notify the Secretary of State regarding
26a Demand to Commence suit determined to involve a company,

 

 

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1corporation, or business registered with that office.
2    When the lienholder commences a suit or files an answer
3within 30 days or the lienholder records a release of lien with
4the county recorder as required by subsection (a) of Section 34
5of the Mechanics Lien Act, then the demand and referral process
6is completed for the recorder for that property. If service
7under this Section is responded to consistent with Section 34
8of the Mechanics Lien Act, the recorder may not proceed under
9subsection (f). If no response is received consistent with
10Section 34 of the Mechanics Lien Act, the recorder may proceed
11under subsection (f).
12    (f) Referral. Upon receipt of an owner's confirmation that
13the lien is not involved in pending litigation and a request
14for the recorder to proceed with a referral, the recorder
15shall: (i) file the Notice of Referral with the county's code
16hearing unit; (ii) identify and notify the lienholder by
17telephone, if available, of the referral and send a copy of the
18Notice of Referral by certified mail to the lienholder using
19information included in the recorded mechanics lien or the last
20known address or registered agent received from the Secretary
21of State or obtained from the Secretary of State's registered
22business database; (iii) send a copy of the Notice of Referral
23by mail to the physical address of the property owner
24associated with the lien; and (iv) record a copy of the Notice
25of Referral in the grantor's index or the grantee's index
26identifying the mechanics lien and include the corresponding

 

 

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1document number. The Notice of Referral shall clearly identify
2the person, persons, or entity believed to be the owner,
3assignee, successor, or beneficiary of the lien. The recorder
4may, at his or her discretion, notify the Secretary of State
5regarding a referral determined to involve a company,
6corporation, or business registered with that office.
7    No earlier than 30 business days after the date the
8lienholder is required to respond to a Demand to Commence Suit
9under Section 34 of the Mechanics Lien Act, the code hearing
10unit shall schedule a hearing to occur at least 30 days after
11sending notice of the date of hearing. Notice of the hearing
12shall be provided by the county recorder, by and through his or
13her representative, to the filer, or the party represented by
14the filer, of the expired lien, the legal representative of the
15recorder of deeds who referred the case, and the last owner of
16record, as identified in the Notice of Referral.
17    If the recorder shows by clear and convincing evidence that
18the lien in question is an expired lien, the administrative law
19judge shall rule the lien is forfeited under Section 34.5 of
20the Mechanics Lien Act and that the lien no longer affects the
21chain of title of the property in any way. The judgment shall
22be forwarded to all parties identified in this subsection. Upon
23receiving judgment of a forfeited lien, the recorder shall,
24within 5 business days, record a copy of the judgment in the
25grantor's index or the grantee's index.
26    If the administrative law judge finds the lien is not

 

 

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1expired, the recorder shall, no later than 5 business days
2after receiving notice of the decision of the administrative
3law judge, record a copy of the judgment in the grantor's index
4or the grantee's index.
5    A decision by an administrative law judge is reviewable
6under the Administrative Review Law, and nothing in this
7Section precludes a property owner or lienholder from
8proceeding with a civil action to resolve questions concerning
9a mechanics lien.
10    A lienholder or property owner may remove the action from
11the code hearing unit to the circuit court as provided in
12subsection (i).
13    (g) Final administrative decision. The recorder's decision
14to refer a mechanics lien or serve a Demand to Commence Suit is
15a final administrative decision that is subject to review under
16the Administrative Review Law by the circuit court of the
17county where the real property is located. The standard of
18review by the circuit court shall be consistent with the
19Administrative Review Law.
20    (h) Liability. A recorder and his or her employees or
21agents are not subject to personal liability by reason of any
22error or omission in the performance of any duty under this
23Section, except in the case of willful or wanton conduct. The
24recorder and his or her employees or agents are not liable for
25the decision to refer a lien or serve a Demand to Commence
26Suit, or failure to refer or serve a Demand to Commence Suit,

 

 

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1of a lien under this Section.
2    (i) Private actions; use of demand and referral process.
3Nothing in this Section precludes a private right of action by
4any party with an interest in the property affected by the
5mechanics lien or a decision by the code hearing unit. Nothing
6in this Section requires a person or entity who may have a
7mechanics lien recorded against his or her property to use the
8mechanics lien demand and referral process created by this
9Section.
10    A lienholder or property owner may remove a matter in the
11referral process to the circuit court at any time prior to the
12final decision of the administrative law judge by delivering a
13certified notice of the suit filed in the circuit court to the
14administrative law judge. Upon receipt of the certified notice,
15the administrative law judge shall dismiss the matter without
16prejudice. If the matter is dismissed due to removal, then the
17demand and referral process is completed for the recorder for
18that property. If the circuit court dismisses the removed
19matter without deciding on whether the lien is expired and
20without prejudice, the recorder may reinstitute the demand and
21referral process under subsection (d).
22    (j) Repeal. This Section is repealed on January 1, 2022.
 
23    (55 ILCS 5/5-41065 new)
24    Sec. 5-41065. Mechanics lien demand and referral
25adjudication.

 

 

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1    (a) Notwithstanding any other provision in this Division, a
2county's code hearing unit must adjudicate an expired mechanics
3lien referred to the unit under Section 3-5010.8.
4    (b) If a county does not have an administrative law judge
5in its code hearing unit who is familiar with the areas of law
6relating to mechanics liens, one may be appointed no later than
73 months after the effective date of this amendatory Act of the
8100th General Assembly to adjudicate all referrals concerning
9mechanics liens under Section 3-5010.8.
10    (c) If an administrative law judge familiar with the areas
11of law relating to mechanics liens has not been appointed as
12provided subsection (b) when a mechanics lien is referred under
13Section 3-5010.8 to the code hearing unit, the case shall be
14removed to the proper circuit court with jurisdiction.
15    (d) This Section is repealed on January 1, 2022.
 
16    (55 ILCS 5/5-43043 new)
17    Sec. 5-43043. Mechanics lien demand and referral
18adjudication.
19    (a) Notwithstanding any other provision in this Division, a
20county's code hearing unit must adjudicate an expired mechanics
21lien referred to the unit under Section 3-5010.8.
22    (b) If a county does not have an administrative law judge
23in its code hearing unit who is familiar with the areas of law
24relating to mechanics liens, one may be appointed no later than
253 months after the effective date of this amendatory Act of the

 

 

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1100th General Assembly to adjudicate all referrals concerning
2mechanics liens under Section 3-5010.8.
3    (c) If an administrative law judge familiar with the areas
4of law relating to mechanics liens has not been appointed as
5provided subsection (b) when a mechanics lien is referred under
6Section 3-5010.8 to the code hearing unit, the case shall be
7removed to the proper circuit court with jurisdiction.
8    (d) This Section is repealed on January 1, 2022.
 
9    Section 10. The Mechanics Lien Act is amended by changing
10Section 34 and adding Section 34.5 as follows:
 
11    (770 ILCS 60/34)  (from Ch. 82, par. 34)
12    Sec. 34. Notice to commence suit.
13    (a) Upon written demand of the owner, lienor, a recorder
14under Section 3-5010.8 of the Counties Code, or any person
15interested in the real estate, or their agent or attorney,
16served on the person claiming the lien, or his agent or
17attorney, requiring suit to be commenced to enforce the lien or
18answer to be filed in a pending suit, suit shall be commenced
19or answer filed within 30 days thereafter, or the lien shall be
20forfeited. Such service may be by registered or certified mail,
21return receipt requested, or by personal service.
22    (b) A written demand under this Section must contain the
23following language in at least 10 point bold face type:
24"Failure to respond to this notice within 30 days after

 

 

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1receipt, as required by Section 34 of the Mechanics Lien Act,
2shall result in the forfeiture of the referenced lien."
3(Source: P.A. 97-1165, eff. 2-11-13.)
 
4    (770 ILCS 60/34.5 new)
5    Sec. 34.5. Mechanics lien administrative adjudication.
6    (a) Notwithstanding any other provision in this Act, a
7county's code hearing unit may adjudicate the validity of a
8mechanics lien under Section 3-5010.8 of the Counties Code. If
9the recorder shows by clear and convincing evidence that the
10lien being adjudicated is an expired lien, the administrative
11law judge shall rule the lien is forfeited under this Act and
12that the lien no longer affects the chain of title of the
13property in any way.
14    (b) This Section is repealed on January 1, 2022.