Sen. Cristina Castro

Filed: 5/17/2018

 

 


 

 


 
10000HB5201sam001LRB100 18632 AWJ 40192 a

1
AMENDMENT TO HOUSE BILL 5201

2    AMENDMENT NO. ______. Amend House Bill 5201 by replacing
3everything after the enacting clause with the following:
 
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

 

 

10000HB5201sam001- 2 -LRB100 18632 AWJ 40192 a

1to an administrative law judge for resolution or demand that
2the lienholder commence suit or forfeit the lien.
3    (b) Definitions. As used in this Section:
4    "Demand to Commence Suit" means the written demand
5specified in Section 34 of the Mechanics Lien Act.
6    "Mechanics lien" and "lien" are used interchangeably in
7this Section.
8    "Notice of Expired Mechanics Lien" means the notice a
9recorder gives to a property owner under subsection (d)
10informing the property owner of an expired lien.
11    "Notice of Referral" means the document referring a
12mechanics lien to a county's code hearing unit.
13    "Recording" and "filing" are used interchangeably in this
14Section.
15    "Referral" or "refer" means a recorder's referral of a
16mechanics lien to a county's code hearing unit to obtain a
17determination as to whether a recorded mechanics lien is valid.
18    "Residential property" means real property improved with
19not less than one nor more than 4 residential dwelling units; a
20residential condominium unit, including, but not limited to,
21the common elements allocated to the exclusive use of the
22condominium unit that form an integral part of the condominium
23unit and any parking unit or units specified by the declaration
24to be allocated to a specific residential condominium unit; or
25a single tract of agriculture real estate consisting of 40
26acres or less that is improved with a single-family residence.

 

 

10000HB5201sam001- 3 -LRB100 18632 AWJ 40192 a

1If a declaration of condominium ownership provides for
2individually owned and transferable parking units,
3"residential property" does not include the parking unit of a
4specified residential condominium unit unless the parking unit
5is included in the legal description of the property against
6which the mechanics lien is recorded.
7    "Subcontractor" has the meaning given to that term in
8subsection (a) of Section 21 of the Mechanics Lien Act.
9    (c) Establishment of a mechanics lien demand and referral
10process. After a public hearing, a recorder in a county with a
11code hearing unit may adopt rules establishing a mechanics lien
12demand and referral process for residential property. A
13recorder shall provide public notice 90 days before the public
14hearing. The notice shall include a statement of the recorder's
15intent to create a mechanics lien demand and referral process
16and shall be published in a newspaper of general circulation in
17the county and, if feasible, be posted on the recorder's
18website and at the recorder's office or offices.
19    (d) Notice of Expired Lien. If a recorder determines, after
20review by legal staff or counsel, that a mechanics lien
21recorded in the grantor's index or the grantee's index is an
22expired lien, the recorder shall serve a Notice of Expired Lien
23by certified mail to the last known address of the owner. The
24owner or legal representative of the owner of the residential
25property shall confirm in writing his or her belief that the
26lien is not involved in pending litigation and, if there is no

 

 

10000HB5201sam001- 4 -LRB100 18632 AWJ 40192 a

1pending litigation, as verified and confirmed by county court
2records, the owner may request that the recorder proceed with a
3referral or serve a Demand to Commence Suit.
4    For the purposes of this Section, a recorder shall
5determine a lien is an expired lien if the lien fits into one
6of the following classifications:
7        (1) unenforced (if a suit to enforce the lien has not
8    been commenced by the lienholder or a counterclaim has not
9    been filed (within 2 years after the completion date of the
10    contract as specified in the recorded mechanics lien, the
11    completion of extra or additional work, or furnishing of
12    extra or additional material under Section 9 of the
13    Mechanics Lien Act) and if an automatic stay under Section
14    362(a) of the United States Bankruptcy Code does not
15    prohibit a suit or counterclaim to foreclose; if a
16    completion date is not specified in the recorded lien,
17    then, as provided under Section 6 of the Mechanics Lien
18    Act: (A) if the work is done or material is furnished
19    within 3 years from the commencement of the work or the
20    commencement of furnishing the material in the case of work
21    done or material furnished as to residential property; or
22    (B) if no later than 5 years from the commencement of the
23    work or the commencement of furnishing the material in the
24    case of work done or material furnished as to any other
25    type of property and if an automatic stay under Section
26    362(a) of the United States Bankruptcy Code does not

 

 

10000HB5201sam001- 5 -LRB100 18632 AWJ 40192 a

1    prohibit a suit or counterclaim to foreclose); or
2        (2) failure to record a satisfaction or release (if the
3    lienholder has failed to fulfill the requirements of
4    subsection (a) of Section 35 of the Mechanics Lien Act).
5    (e) Demand to Commence Suit. Upon receipt of an owner's
6confirmation that the lien is not involved in pending
7litigation and a request for the recorder to serve a Demand to
8Commence Suit, the recorder shall serve a Demand to Commence
9Suit on the lienholder of the expired lien as provided in
10Section 34 of the Mechanics Lien Act. A recorder may request
11that the Secretary of State assist in providing registered
12agent information or obtain information from the Secretary of
13State's registered business database when the recorder seeks to
14serve a Demand to Commence suit on the lienholder. Upon
15request, the Secretary of State, or his or her designee, shall
16provide the last known address or registered agent information
17for a lienholder who is incorporated or doing business in the
18State. The recorder must record a copy of the Demand to
19Commence suit in the grantor's index or the grantee's index
20identifying the mechanics lien and include the corresponding
21document number and the date of demand. The recorder may, at
22his or her discretion, notify the Secretary of State regarding
23a Demand to Commence suit determined to involve a company,
24corporation, or business registered with that office.
25    When the lienholder commences a suit or files an answer
26within 30 days or the lienholder records a release of lien with

 

 

10000HB5201sam001- 6 -LRB100 18632 AWJ 40192 a

1the county recorder as required by subsection (a) of Section 34
2of the Mechanics Lien Act, then the demand and referral process
3is completed for the recorder for that property.
4    (f) Referral. Upon receipt of an owner's confirmation that
5the lien is not involved in pending litigation and a request
6for the recorder to proceed with a referral, the recorder
7shall: (i) file the Notice of Referral with the county's code
8hearing unit; (ii) identify and notify the lienholder by
9telephone, if available, of the referral and send a copy of the
10Notice of Referral by certified mail to the lienholder using
11information included in the recorded mechanics lien or the last
12known address or registered agent received from the Secretary
13of State or obtained from the Secretary of State's registered
14business database; (iii) send a copy of the Notice of Referral
15by mail to the physical address of the property owner
16associated with the lien; and (iv) record a copy of the Notice
17of Referral in the grantor's index or the grantee's index
18identifying the mechanics lien and include the corresponding
19document number. The Notice of Referral shall clearly identify
20the person, persons, or entity believed to be the owner,
21assignee, successor, or beneficiary of the lien. The recorder
22may, at his or her discretion, notify the Secretary of State
23regarding a referral determined to involve a company,
24corporation, or business registered with that office.
25    No later than 30 business days after receipt of the Notice
26of Referral, the code hearing unit shall schedule a hearing to

 

 

10000HB5201sam001- 7 -LRB100 18632 AWJ 40192 a

1occur no later than 30 days after receiving the referral.
2Notice of the hearing shall be provided by the county recorder,
3by and through his or her representative, to the filer, or the
4party represented by the filer, of the expired lien, the legal
5representative of the recorder of deeds who referred the case,
6and the last owner of record, as identified in the Notice of
7Referral.
8    If the recorder shows by clear and convincing evidence that
9the lien in question is an expired lien, the administrative law
10judge shall rule the lien is forfeited under Section 34.5 of
11the Mechanics Lien Act and that the lien no longer affects the
12chain of title of the property in any way. The judgment shall
13be forwarded to all parties identified in this subsection. Upon
14receiving judgment of a forfeited lien, the recorder shall,
15within 5 business days, record a copy of the judgment in the
16grantor's index or the grantee's index.
17    If the administrative law judge finds the lien to be valid
18and still within the statutorily prescribed period of time to
19remain as an active lien in the property's chain of title, the
20recorder shall, no later than 5 business days after receiving
21notice of the decision of the administrative law judge, record
22a copy of the judgment in the grantor's index or the grantee's
23index.
24    A decision by an administrative law judge is reviewable
25under the Administrative Review Law, and nothing in this
26Section precludes a property owner or lienholder from

 

 

10000HB5201sam001- 8 -LRB100 18632 AWJ 40192 a

1proceeding with a civil action to resolve questions concerning
2a mechanics lien.
3    A lienholder or property owner may remove the action from
4the code hearing unit to the circuit court as provided in
5subsection (i).
6    (g) Final administrative decision. The recorder's decision
7to refer a mechanics lien or serve a Demand to Commence Suit is
8a final administrative decision that is subject to review under
9the Administrative Review Law by the circuit court of the
10county where the real property is located. The standard of
11review by the circuit court shall be consistent with the
12Administrative Review Law.
13    (h) Liability. A recorder and his or her employees or
14agents are not subject to personal liability by reason of any
15error or omission in the performance of any duty under this
16Section, except in the case of willful or wanton conduct. The
17recorder and his or her employees or agents are not liable for
18the decision to refer a lien or serve a Demand to Commence
19Suit, or failure to refer or serve a Demand to Commence Suit,
20of a lien under this Section.
21    (i) Private actions; use of demand and referral process.
22Nothing in this Section precludes a private right of action by
23any party with an interest in the property affected by the
24mechanics lien or a decision by the code hearing unit. Nothing
25in this Section requires a person or entity who may have a
26mechanics lien recorded against his or her property to use the

 

 

10000HB5201sam001- 9 -LRB100 18632 AWJ 40192 a

1mechanics lien demand and referral process created by this
2Section.
3    A lienholder or property owner may remove a matter in the
4referral process to the circuit court at any time prior to the
5final decision of the administrative law judge by delivering a
6certified notice of the suit filed in the circuit court to the
7administrative law judge. Upon receipt of the certified notice,
8the administrative law judge shall dismiss the matter without
9prejudice. If the matter is dismissed due to removal, then the
10demand and referral process is completed for the recorder for
11that property. If the circuit court dismisses the removed
12matter without deciding on whether the lien is expired and
13without prejudice, the recorder may reinstitute the demand and
14referral process under subsection (d).
15    (j) Repeal. This Section is repealed on January 1, 2022.
 
16    (55 ILCS 5/5-41065 new)
17    Sec. 5-41065. 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

 

 

10000HB5201sam001- 10 -LRB100 18632 AWJ 40192 a

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    (55 ILCS 5/5-43043 new)
10    Sec. 5-43043. Mechanics lien demand and referral
11adjudication.
12    (a) Notwithstanding any other provision in this Division, a
13county's code hearing unit must adjudicate an expired mechanics
14lien referred to the unit under Section 3-5010.8.
15    (b) If a county does not have an administrative law judge
16in its code hearing unit who is familiar with the areas of law
17relating to mechanics liens, one may be appointed no later than
183 months after the effective date of this amendatory Act of the
19100th General Assembly to adjudicate all referrals concerning
20mechanics liens under Section 3-5010.8.
21    (c) If an administrative law judge familiar with the areas
22of law relating to mechanics liens has not been appointed as
23provided subsection (b) when a mechanics lien is referred under
24Section 3-5010.8 to the code hearing unit, the case shall be
25removed to the proper circuit court with jurisdiction.

 

 

10000HB5201sam001- 11 -LRB100 18632 AWJ 40192 a

1    (d) This Section is repealed on January 1, 2022.
 
2    Section 10. The Mechanics Lien Act is amended by changing
3Section 34 and adding Section 34.5 as follows:
 
4    (770 ILCS 60/34)  (from Ch. 82, par. 34)
5    Sec. 34. Notice to commence suit.
6    (a) Upon written demand of the owner, lienor, a recorder
7under Section 3-5010.8 of the Counties Code, or any person
8interested in the real estate, or their agent or attorney,
9served on the person claiming the lien, or his agent or
10attorney, requiring suit to be commenced to enforce the lien or
11answer to be filed in a pending suit, suit shall be commenced
12or answer filed within 30 days thereafter, or the lien shall be
13forfeited. Such service may be by registered or certified mail,
14return receipt requested, or by personal service.
15    (b) A written demand under this Section must contain the
16following language in at least 10 point bold face type:
17"Failure to respond to this notice within 30 days after
18receipt, as required by Section 34 of the Mechanics Lien Act,
19shall result in the forfeiture of the referenced lien."
20(Source: P.A. 97-1165, eff. 2-11-13.)
 
21    (770 ILCS 60/34.5 new)
22    Sec. 34.5. Mechanics lien administrative adjudication.
23    (a) Notwithstanding any other provision in this Act, a

 

 

10000HB5201sam001- 12 -LRB100 18632 AWJ 40192 a

1county's code hearing unit may adjudicate the validity of a
2mechanics lien under Section 3-5010.8 of the Counties Code. If
3the recorder shows by clear and convincing evidence that the
4lien being adjudicated is an expired lien, the administrative
5law judge shall rule the lien is forfeited under this Act and
6that the lien no longer affects the chain of title of the
7property in any way.
8    (b) This Section is repealed on January 1, 2022.".