First District of Illinois Holds Strict Compliance with Section 5 of the Mechanics Lien Act is a Prerequisite to Enforcing a Mechanics Lien
Section 5 of the Illinois Mechanics Lien Act (the Act) requires that an owner require, and the contractor provide, a sworn statement containing the names and addresses of all parties who have furnished materials or labor on the project and the amounts due or to become due to each of them. Until recently, it was unclear under decisions issued by the First District of the Illinois Court of Appeals whether the sworn-statement requirement should be strictly construed, and therefore it was unclear whether a failure to comply strictly with the requirements of Section 5 would invalidate a claim for lien under the Act.
That all changed when the First District issued its decision in Cityline Construction Fire and Water Restoration, Inc. v. Roberts, 2014 Ill. App. (1st) 130, 730, 7 N.E.3d 235 (1st Dist. 2014). In that case, the plaintiff, Cityline, and the defendants, Andrew C. Roberts and Valier Gherold (Owners) entered into an oral agreement under which Cityline agreed to provide certain restoration and reconstruction services for the Owners’ residence. Cityline admitted that the Owners requested a sworn statement while the construction was underway and further admitted that Cityline never provided the requested sworn statement. Cityline then filed a lawsuit to foreclose a mechanic’s lien, pursuant to the Act, and the Owners moved for partial summary judgment on the grounds that Cityline’s lien was void because of the failure to provide a sworn statement that strictly complied with Section 5. Cityline countered by arguing that strict compliance with the Act was not required, and that the Owners suffered no prejudice because all subcontractors had been paid. The trial court agreed with the Owners and ruled that Cityline’s lien was void.
The Appellate Court affirmed the trial court’s ruling and held that Cityline’s failure to provide the Owners with a sworn statement that strictly complied with the requirements of Section 5 invalidated its mechanic’s lien. The court distinguished several cases that liberally construed Section 5 and rejected Cityline’s argument that the lien should be enforced under a “liberal construction” of the Act. Instead, the court expressly adopted the reasoning of the Second District Appellate Court’s decisions in Deerfield Electric Co. v. Herbert W. Jaeger & Associates, Inc., 74 Ill.App.3d 380 (2d Dist. 1979) and Weydert Homes, Inc. v. Kammes, 395 Ill.App.3d 512, (2d Dist. 2009), which held that the requirements of Section 5 must be strictly followed.
The First District was not persuaded by the argument that the Owners should be required to show that they were prejudiced by Cityline’s failure to comply strictly with Section 5. According to the court, “regardless of equitable considerations, the rights created under the Act are in derogation of the common law and therefore the procedural and technical requirements of section 5 of the Act must be strictly complied with in order for a mechanic’s lien to be valid.”Cityline, 2014 Ill. App. (1st) 130, 730, ¶ 17, 7 N.E.3d at 241.
Cityline also elucidates a distinction between contract and lien claims when interpreting the requirements of Section 5. In the context of a contract claim, Cityline discussed that “it would be inequitable to allow a technicality to defeat an otherwise valid contract claim.” Cityline, 2014 Ill. App. (1st) 130, 730, ¶ 16, 7 N.E.3d at 240 (emphasis in original). The court then reiterated that “[u]nlike a breach of contract claim, the validity of a mechanic’s lien is governed entirely by the Act and therefore the holding in [National Wrecking Co. v. Midwest Terminal Corp., 234 Ill.App.3d 750 (1st Dist. 1992)] has no bearing on the issue presented in [Cityline’s] appeal.” Cityline, 2014 Ill. App. (1st) 130, 730, ¶ 21, 7 N.E.3d at 242. Therefore, while it is now clear that the failure to comply strictly with Section 5 will bar a lien claim, it is equally clear that the same failure will not always bar a contract claim for the same project.