CHICAGO — The Mechanical Contractors Association of Chicago (MCA Chicago) is urging Illinois legislators to restore the Illinois Mechanics Lien Act to its original intent, reversing an Illinois Supreme Court decision that limits a contractor’s ability to collect on work performed for properties that end up in foreclosure. It is anticipated an amendment to Section 16 of the Act, HB 3636, will soon be reviewed by the full state Senate.

MCA Chicago said a recent decision regarding a single foreclosure made by the Illinois Supreme Court known as “Cypress Creek” significantly changes the terms of payment to contractors and lenders.

“Since the 1840s when the Act was first established, contractors have always been given consideration for the value of improvements made to the property as they supplied the labor and materials,” said Stephen L. Lamb, MCA Chicago executive vice president. “This court decision sets precedent for lenders to now have first consideration for both the land itself and the improvements erected on the property.” He urged all contractors to contact their Illinois legislative representatives asking them to support HB 3636.

“Unlike lenders, contractors, subcontractors, and suppliers do not have the same tools to determine the credit-worthiness of a project owner and have therefore been permitted mechanics lien rights to encourage them to provide their labor and material on credit. While lenders may secure a project through a personal guarantee or collateral security, contractors have no other recourse other than the lien to collect for their work if the owner does not pay and the bulk of the sale proceeds are taken by the bank,” said Evan Williams, MCA Chicago vice president of external relations.

“New construction projects in Illinois hinge on contractors continuing to take risk, supply labor and material on credit, and put men and women to work. Restoration of their lien rights under the Act will go a long way in creating incentives to do so,” said Williams.

MCA Chicago has posted additional information on its website at www.mca.org.

Publication date: 03/26/2012