Home>Levelset Community>Legal Help>If a contractor has been paid in full for a project, does the materials supplier have any recourse by a mechanics lien or other non suit method, to recover the monies owed to the supplier?

If a contractor has been paid in full for a project, does the materials supplier have any recourse by a mechanics lien or other non suit method, to recover the monies owed to the supplier?

The owner paid the General Contractor without the suppliers knowledge, trying to exclude himself in any payment discrepancies. The owner had agreed to a bi party check when he was told the materials were not paid for by the contractor, but paid the contractor the remainder anyway.

1 reply

Aug 24, 2017

The general rule is that a material supplier or other lower-tiered party on a project will be able to recover through a mechanics lien despite prior payment by the property owner to the GC (or the GC to subs). Mechanics liens in many situations can force the property owner to pay twice for the same work - and then seek recover of that double-paid amount from the party that originally should have paid. This is one of the reasons that preliminary notice requirements were developed - so the property owner has notice that a particular party is on the project and so that the property owner and GC are not surprised by a lien from a "hidden" party. Accordingly for the lien to be effective, the required preliminary notices must be given.

Whether a party can claim an enforceable lien after payment to the GC depends on whether the project occurred in a "full price" lien state, or an "unpaid balance" lien state. In a full price lien state, it makes no difference whether the owner has paid or not. In unpaid balance lien states, the lien is limited to the amount remaining unpaid by the owner.

Illinois is kind of a tricky situation. Illinois is an unpaid balance lien state, technically, but there are exceptions. In Illinois, the unpaid balance rule only applies if the property owner qualifies for that protection. To qualify, the owner must specifically request and receive a “sworn statement” from the general contractor before making payments. If the owner does this, the owner will be protected against paying twice pursuant to a mechanics lien claim, but if they pay before receiving the sworn statement, the owner may be compelled to pay twice.

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