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Public Act 101-0296
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| SB0062 Enrolled | LRB101 04056 AWJ 49064 b |
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AN ACT concerning local government.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 5. The Counties Code is amended by changing Section |
3-5010.8 as follows:
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(55 ILCS 5/3-5010.8) |
(This Section may contain text from a Public Act with a |
delayed effective date) |
(Section scheduled to be repealed on January 1, 2022) |
Sec. 3-5010.8. Mechanics lien demand and referral pilot |
program. |
(a) Legislative findings. The General Assembly finds that |
expired mechanics liens on residential property, which cloud |
title to property, are a rapidly growing problem throughout the |
State. In order to address the increase in expired mechanics |
liens and, more specifically, those that have not been released |
by the lienholder, a recorder may establish a process to demand |
and refer mechanics liens that have been recorded but not |
litigated or released in accordance with the Mechanics Lien Act |
to an administrative law judge for resolution or demand that |
the lienholder commence suit or forfeit the lien. |
(b) Definitions. As used in this Section: |
"Demand to Commence Suit" means the written demand |
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specified in Section 34 of the Mechanics Lien Act. |
"Mechanics lien" and "lien" are used interchangeably in |
this Section. |
"Notice of Expired Mechanics Lien" means the notice a |
recorder gives to a property owner under subsection (d) |
informing the property owner of an expired lien. |
"Notice of Referral" means the document referring a |
mechanics lien to a county's code hearing unit. |
"Recording" and "filing" are used interchangeably in this |
Section. |
"Referral" or "refer" means a recorder's referral of a |
mechanics lien to a county's code hearing unit to obtain a |
determination as to whether a recorded mechanics lien is valid. |
"Residential property" means real property improved with |
not less than one nor more than 4 residential dwelling units; a |
residential condominium unit, including, but not limited to, |
the common elements allocated to the exclusive use of the |
condominium unit that form an integral part of the condominium |
unit and any parking unit or units specified by the declaration |
to be allocated to a specific residential condominium unit; or |
a single tract of agriculture real estate consisting of 40 |
acres or less that is improved with a single-family residence. |
If a declaration of condominium ownership provides for |
individually owned and transferable parking units, |
"residential property" does not include the parking unit of a |
specified residential condominium unit unless the parking unit |
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is included in the legal description of the property against |
which the mechanics lien is recorded. |
(c) Establishment of a mechanics lien demand and referral |
process. After a public hearing, a recorder in a county with a |
code hearing unit may adopt rules establishing a mechanics lien |
demand and referral process for residential property. A |
recorder shall provide public notice 90 days before the public |
hearing. The notice shall include a statement of the recorder's |
intent to create a mechanics lien demand and referral process |
and shall be published in a newspaper of general circulation in |
the county and, if feasible, be posted on the recorder's |
website and at the recorder's office or offices. |
(d) Notice of Expired Lien. If a recorder determines, after |
review by legal staff or counsel, that a mechanics lien |
recorded in the grantor's index or the grantee's index is an |
expired lien, the recorder shall serve a Notice of Expired Lien |
by certified mail to the last known address of the owner. The |
owner or legal representative of the owner of the residential |
property shall confirm in writing his or her belief that the |
lien is not involved in pending litigation and, if there is no |
pending litigation, as verified and confirmed by county court |
records, the owner may request that the recorder proceed with a |
referral or serve a Demand to Commence Suit. |
For the purposes of this Section, a recorder shall |
determine if a lien is an expired lien. A lien is expired if |
the lien is unenforced (if a suit to enforce the lien has not |
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been commenced by the lienholder or a counterclaim has not been |
filed by the lienholder (within 2 years after the completion |
date of the contract as specified in the recorded mechanics |
lien. The 2-year period shall be increased to the extent that |
an automatic stay under Section 362(a) of the United States |
Bankruptcy Code stays a suit or counterclaim to foreclose the |
lien. If a work , the completion of extra or additional work, or |
furnishing of extra or additional material under Section 9 of |
the Mechanics Lien Act; if a completion date is not specified |
in the recorded lien, then the work completion date is shall be |
deemed the date of recording of the mechanics lien) and if an |
automatic stay under Section 362(a) of the United States |
Bankruptcy Code does not prohibit a suit or counterclaim to |
foreclose. |
(e) Demand to Commence Suit. Upon receipt of an owner's |
confirmation that the lien is not involved in pending |
litigation and a request for the recorder to serve a Demand to |
Commence Suit, the recorder shall serve a Demand to Commence |
Suit on the lienholder of the expired lien as provided in |
Section 34 of the Mechanics Lien Act. A recorder may request |
that the Secretary of State assist in providing registered |
agent information or obtain information from the Secretary of |
State's registered business database when the recorder seeks to |
serve a Demand to Commence suit on the lienholder. Upon |
request, the Secretary of State, or his or her designee, shall |
provide the last known address or registered agent information |
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for a lienholder who is incorporated or doing business in the |
State. The recorder must record a copy of the Demand to |
Commence suit in the grantor's index or the grantee's index |
identifying the mechanics lien and include the corresponding |
document number and the date of demand. The recorder may, at |
his or her discretion, notify the Secretary of State regarding |
a Demand to Commence suit determined to involve a company, |
corporation, or business registered with that office. |
When the lienholder commences a suit or files an answer |
within 30 days or the lienholder records a release of lien with |
the county recorder as required by subsection (a) of Section 34 |
of the Mechanics Lien Act, then the demand and referral process |
is completed for the recorder for that property. If service |
under this Section is responded to consistent with Section 34 |
of the Mechanics Lien Act, the recorder may not proceed under |
subsection (f). If no response is received consistent with |
Section 34 of the Mechanics Lien Act, the recorder may proceed |
under subsection (f). |
(f) Referral. Upon receipt of an owner's confirmation that |
the lien is not involved in pending litigation and a request |
for the recorder to proceed with a referral, the recorder |
shall: (i) file the Notice of Referral with the county's code |
hearing unit; (ii) identify and notify the lienholder by |
telephone, if available, of the referral and send a copy of the |
Notice of Referral by certified mail to the lienholder using |
information included in the recorded mechanics lien or the last |
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known address or registered agent received from the Secretary |
of State or obtained from the Secretary of State's registered |
business database; (iii) send a copy of the Notice of Referral |
by mail to the physical address of the property owner |
associated with the lien; and (iv) record a copy of the Notice |
of Referral in the grantor's index or the grantee's index |
identifying the mechanics lien and include the corresponding |
document number. The Notice of Referral shall clearly identify |
the person, persons, or entity believed to be the owner, |
assignee, successor, or beneficiary of the lien. The recorder |
may, at his or her discretion, notify the Secretary of State |
regarding a referral determined to involve a company, |
corporation, or business registered with that office. |
No earlier than 30 business days after the date the |
lienholder is required to respond to a Demand to Commence Suit |
under Section 34 of the Mechanics Lien Act, the code hearing |
unit shall schedule a hearing to occur at least 30 days after |
sending notice of the date of hearing. Notice of the hearing |
shall be provided by the county recorder, by and through his or |
her representative, to the filer, or the party represented by |
the filer, of the expired lien, the legal representative of the |
recorder of deeds who referred the case, and the last owner of |
record, as identified in the Notice of Referral. |
If the recorder shows by clear and convincing evidence that |
the lien in question is an expired lien, the administrative law |
judge shall rule the lien is forfeited under Section 34.5 of |
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the Mechanics Lien Act and that the lien no longer affects the |
chain of title of the property in any way. The judgment shall |
be forwarded to all parties identified in this subsection. Upon |
receiving judgment of a forfeited lien, the recorder shall, |
within 5 business days, record a copy of the judgment in the |
grantor's index or the grantee's index. |
If the administrative law judge finds the lien is not |
expired, the recorder shall, no later than 5 business days |
after receiving notice of the decision of the administrative |
law judge, record a copy of the judgment in the grantor's index |
or the grantee's index. |
A decision by an administrative law judge is reviewable |
under the Administrative Review Law, and nothing in this |
Section precludes a property owner or lienholder from |
proceeding with a civil action to resolve questions concerning |
a mechanics lien. |
A lienholder or property owner may remove the action from |
the code hearing unit to the circuit court as provided in |
subsection (i). |
(g) Final administrative decision. The recorder's decision |
to refer a mechanics lien or serve a Demand to Commence Suit is |
a final administrative decision that is subject to review under |
the Administrative Review Law by the circuit court of the |
county where the real property is located. The standard of |
review by the circuit court shall be consistent with the |
Administrative Review Law. |
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(h) Liability. A recorder and his or her employees or |
agents are not subject to personal liability by reason of any |
error or omission in the performance of any duty under this |
Section, except in the case of willful or wanton conduct. The |
recorder and his or her employees or agents are not liable for |
the decision to refer a lien or serve a Demand to Commence |
Suit, or failure to refer or serve a Demand to Commence Suit, |
of a lien under this Section. |
(i) Private actions; use of demand and referral process. |
Nothing in this Section precludes a private right of action by |
any party with an interest in the property affected by the |
mechanics lien or a decision by the code hearing unit. Nothing |
in this Section requires a person or entity who may have a |
mechanics lien recorded against his or her property to use the |
mechanics lien demand and referral process created by this |
Section. |
A lienholder or property owner may remove a matter in the |
referral process to the circuit court at any time prior to the |
final decision of the administrative law judge by delivering a |
certified notice of the suit filed in the circuit court to the |
administrative law judge. Upon receipt of the certified notice, |
the administrative law judge shall dismiss the matter without |
prejudice. If the matter is dismissed due to removal, then the |
demand and referral process is completed for the recorder for |
that property. If the circuit court dismisses the removed |
matter without deciding on whether the lien is expired and |