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Payment on a public project

We filed a lien on a public project. The contractor who hired my company as an installing supplier of product on site did not pay us. (20k) We were contacted by the Library and told they paid the contractor in full and we need to go after them. My company never supplied any waivers stating we were paid for the project. So as far as I am concerned they are liable to pay me,

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Apr 6, 2020

First, keep in mind it's completely normal for an owner to dispute a lien claim once it's filed. Further, it's natural for an owner to be frustrated by a lien when they've paid their contractor in full. However, that's the purpose of a subcontractor or supplier - to secure the right to payment and force an owner to apply pressure on their contractor to ensure payment. With that being said, if an Illinois owner has taken the appropriate steps and has fully paid their contractor, then that owner won't be financially liable for the claims of subcontractors and suppliers. More on that below.

Illinois mechanics liens and protection for property owners

In Illinois, an owner who's fully paid their GC will be protected from lien claims if appropriate steps are taken. Specifically, if the owner requests a sworn statement from the GC listing all of the GC's subs and suppliers and their payment status, the owner is entitled to rely on that information when disbursing payments. Put more simply - if the owner requested this sworn statement, and if the GC provided one which didn't indicate any payment issues or disputes, then the owner can't be forced to pay for the work twice. As discussed in the following article, this is true even if the GC lies on that sworn statement (as long as the owner isn't aware of the lie): Illinois Court Gives “Unpaid Balance” Rules Liberal Treatment To Favor Owners. So, to determine if your lien might be blocked - it's probably a good idea to request this documentation from the owner and/or the GC. Of course, even if there is some potential issue with the lien, that doesn't necessarily mean it won't be paid. Plus, there are always recovery options outside of the mechanics lien process - like claims under breach of contract or prompt payment laws, or sending a debt to collections. In either event, this article could be useful: The 4 Steps to Take After Filing a Mechanics Lien.

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Apr 6, 2020

So then there is no issue with it being a public project? Our lien remains in effect?

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Apr 6, 2020

That'd be an another potential hurdle, certainly - though it didn't sound like the lien was disputed for that issue based on the question you posted above. Generally, public projects cannot be liened. This is because publicly owned land typically cannot be involuntarily encumbered by private persons or companies. If the library isn't on publicly owned land, then a lien claim could certainly be fully effective. But, if the property is entirely public, then the lien filed against that property could likely be tossed aside as a result. If the project is public and if a mechanics lien claim isn't available - then a lien on the project funds or a claim against the GC's payment bond (if one is present) would be more appropriate. You can learn more about those remedies here: Illinois Bond Claim Guide and FAQs.

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Apr 6, 2020

It reads "This product represents both a claim on the project funds and a claim on the project's payment bond. Those working on state or municipal projects in Illinois can file public claims (commonly referred to as mechanics liens) against project funds. There is no deadline to file the claim, but the claim is only effective and enforceable against money not yet paid by the state agency to the prime contractor at the time of the notice. Thus, the sooner a claim is made, the better off many claimants will be. Illinois bond claims do, however, have a hard deadline - and in order to make a claim on the payment bond, the claim must be made within 180 days of the claimant's last furnishing.

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