Home Repair and Remodeling Act - New News in Illinois Courts May Impact Lien Cases

As you have seen from my prior posts, I do enjoy a good mechanic's lien case. In my blogging searches, I recently found out about the case of Universal Structures v. Buchman, which may serve to turn some prior law on its head. The gist of the opinion cited below, is that if a lien claimant files a claim under the Mechanic's lien act, even if there is a violation of some other Illinois law or statute, the law of contracts will come in and save the lien claimant from any defenses to payment that the opponent may have. Hmmmm... interesting. Here's more:

On June 30, 2010, the First District Appellate Court of Illinois reversed the decision of the trial court and remanded the case of Universal Structures, Ltd. v. Dr. Alan Buchman, et al. The trial court had dismissed the plaintiff general contractor’s mechanic’s lien foreclosure action claiming that the general contractor had failed to procedurally comply with the Home Repair and Remodeling Act (815 ILCS 513/20) by not obtaining the homeowners’ signatures on work orders and failing to furnish the homeowners with a Consumer Rights brochure. The First District reversed the finding of the trial court finding that the general contractor was not precluded from asserting mechanic’s lien rights upon the homeowners’ property even though it had failed to comply with Sections 20 and 30 of the Act. Relying predominantly on Fandel v. Alan, 398 Ill.App.3d 177, 188-189 (3d Dist. 2010), the First District found that the general contractor’s procedural errors in not securing the homeowners’ signatures on work orders prior to beginning construction and failing to provide the homeowners with the Consumer Rights brochure, even though unlawful violations under the Act, did not invalidate an otherwise enforceable agreement.

The Court held that “Nothing in the Act provides that a contractor who fails to get a signature on a written work order or provide the homeowner with a Consumer Rights brochure cannot collect for his or her work and that the homeowner is entitled to receive a valuable benefit without paying for it. . . . Merely because a contract may violate some law or some regulation does not necessarily make that contract unenforceable. Rather, contracts are unenforceable when the subject matter of the contract where the purpose of the contract violated the law, " citing Federal Land Bank of St. Louis v. Walker, 212 Ill.App.3d 420, 422 (1991). The Appellate Court found that the underlying agreement between the parties was valid and that the general contractor’s procedural violation under the Act did not bar it from asserting a mechanic’s lien or breach of contract claim. This opinion also references the amendment to language in Section 30 of the Act as support for its decision in this case. The First District notes in a footnote that it believes that Artesan Design, Behl and Fandel are better reasoned than the Third District’s opinion in Roberts v. Atkins, 397 Ill.App.3d 858 (3d Dist. 2010). It also distinguishes the Roberts case based on the fact that the plaintiff in that case never provided a written contract or work order to the defendant.

Why is this important to you, the property owner? Because the latest decision Universal Structures strengthens the long line of cases which focus on the law of contracts and a contractor’s right to recover pursuant to contract theories despite the fact that the contractor has failed to comply with procedural aspects of the Home Repair and Remodeling Act, which might have otherwise provided a defense. WHat is our bottom line, then? The Mechanic's Lien Act just got more teeth. Property owners attention please! Get lien waivers, and be sure to closely monitor all construction activity. Get contractor sworn statements, lien releases and everything in writing! Don't pussyfoot around the necessary paperwork! Otherwise, you'll be calling me to chase your money.

Fore more information on Mechanic's Liens, construction or real estate law, as always, call Alisa Levin at 312-720-0082 for your greater Chicago Law Source.