Often times, a mechanics lien claim filed by a contractor or sub-contractors for work performed on the Association’s common elements has the effect of creating a cloud on title which complicates and in some cases prevents the refinancing or sales of units in the Association.

Commencing on January 1, 2016, a new law (770 ILCS 60/38.1) goes into effect that permits the Association to secure a bond for 175% of the lien claim (from a qualified bond company) which would be posted with the Court. Upon securing the bond, the lien would be discharged, and the parties would proceed with a lawsuit against the bond, and other causes of action such as fraud, unjust enrichment and breach of contract would proceed as normal.

The net effect of this provision is that there would no longer be a cloud on title which would otherwise affect the closings on units.  Another aspect of this new law provides a right of the Association to recover its attorney’s fees and costs in the defense of the lien claim.  This creates a liability for contractors and general contractors which previously may not have existed.

If you have any questions, or would like to discuss this new law, please feel free to contact Kovitz Shifrin Nesbit attorney Jason Orth at 847-777-7277 or jorth@ksnlaw.com.