Q. We recently completed a kitchen and bathroom remodeling. Three times we asked our contractor, with whom we had done business with before, to send us a Waiver of Lien to which he agreed to do but never did. The contractor is in the midst of a divorce and at the advice of his attorney filed bankruptcy under his company's old name and set up a new business.
We paid the contractor in full for the completed kitchen prior to his filing bankruptcy. Unfortunately, he has not paid the supplier of the cabinets. Due to this, the cabinet supplier has filed a mechanics lien against our home, our contractor and our bank in the amount of $12,718.11.
Additionally, per the proposal and contract, we were allotted an "allowance" of $16,000 for the cabinets. It is our opinion that, as it was with all other allowances, if we were under the allowance we would receive a credit and if we were over the allowance we were invoiced. Per the Mechanic's Lien document, the cabinet cost was $12,718.11. We should be entitled to a credit or refund of $3,281.89.
We have filed complaints with the BBB and the Illinois attorney general's office. How do we get the lien removed and any allowance credits rebated to us?
A. Let's start with how this could have been handled better. You indicate you requested lien waivers but never received them. Want to know the best way to obtain lien waivers from your contractor? Don't pay him until you receive them.
However, obtaining lien waivers from just your contractor would not have protected you. You were aware the contractor was purchasing the cabinets from a third party. You should have demanded lien waivers from not only the contractor but any and all suppliers prior to making full payment. You would know who your contractor's suppliers were if you demanded a sworn statement prior to the commencement of the job. A sworn statement is a document completed by the contractor listing all subcontractors that the contractor intends to use. This includes suppliers.
Of course, the time frame on how projects are paid is a constant source of battle between contractor and customer. The contractor wants as much of the payment up front as he or she can get and the customer's job is to delay as much of the payment as possible until all lien waivers are obtained. This way, if one finds themselves in the position you now find yourself in, there is still project money available to pay the subcontractors.
So, what do you do now? The subcontractor was required to serve you with two notices to maintain his lien rights. First, because this was an owner occupied property, the subcontractor was required to furnish you notice that he was hired by the contractor within 60 days of first furnishing supplies to the property. He was then required to furnish you a similar notice within 90 days of last furnishing supplies to the property. If the supplier failed to provide either of these notices, the lien is invalid.
Presuming the proper notices were timely served by the supplier, you could make a demand upon the supplier pursuant to 770 ILCS 60/34, whereby you demand the supplier file suit to foreclose the lien within 30 days. If the demand is properly served and the supplier fails to file suit to foreclose the lien within 30 days, the lien is no longer valid.
The problem with this strategy, though, is that it is possible the supplier will file suit within the 30 days, which means you now will probably need to retain an attorney to defend the suit, which is a further expense to you. Another strategy would be to do nothing. The lien must be foreclosed within two years of the date the supplies were furnished to the property. Many contractors in your supplier's position will wait to see what happens rather than incur the costs of proceeding with a lawsuit. After some time has passed, the supplier may elect not to incur the costs of filing suit over a $12,000 claim.
As for your $3,281 credit, you would probably need to file a lawsuit against your contractor to recover these funds, which given his bankruptcy and apparent financial difficulties, would probably be a waste of time and money.
• Send your questions to attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by email to firstname.lastname@example.org or call (847) 359-8983.