New Changes to IL Lien/Bond Laws (8/03) - LAW OFFICE OF ELIAS M. GORDAN

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0 height="100%"><tr> <td valign="top" width=175 BGCOLOR="#A6CAF0" TEXT="#080000"> <div> <B> <TABLE BORDER="0" CELLPADDING="2" CELLSPACING="1" WIDTH="132" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" > <tR> <tD VALIGN=TOP HEIGHT= 35 ><NOBR><div> <IMG BORDER="0" SRC="1x1.gif" HEIGHT="29" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" WIDTH="21"></div> </NOBR></tD> <tD VALIGN=TOP><NOBR><div> <IMG BORDER="0" SRC="1x1.gif" HEIGHT="29" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" WIDTH="21"></div> </NOBR></tD> <tD VALIGN=TOP WIDTH="20"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="35" ALIGN="bottom" WIDTH="20" HSPACE="0" VSPACE="0"></tD> <tD VALIGN=TOP><NOBR><div> <A HREF="index.htm" TARGET="_top" TITLE="HOME PAGE LAW OFFICE OF ELIAS M. GORDAN"><U><B><IMG SRC="00d0d1d0.gif" border=0 width="13" height="29" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></B></U></A></div> </NOBR></tD> <tD VALIGN=TOP><NOBR><div> <IMG BORDER="0" SRC="1x1.gif" HEIGHT="29" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" WIDTH="27"></div> </NOBR></tD> </tR> </TABLE></B></div> <div> <B>© </B>2001 Elias M. Gordan</div> <div> All rights reserved</div> <bR> <div> <B>Law Office of</B></div> <div> <B>Elias M. Gordan</B></div> <div> Post Office Box 60</div> <div> Palos Park, IL  60464</div> <bR> <div> Phone  708.923.9735</div> <div> Email  gordanlaw@att.net</div> <div> Web    www.gordanlaw.com</div> <div> <A HREF="index.htm" TARGET="_top" TITLE="HOME PAGE LAW OFFICE OF ELIAS M. GORDAN"><U><B>HOME</B></U></A></div> <div> <A HREF="id24.htm" TARGET="_top" TITLE="LAW OFFICE OF ELIAS M. GORDAN About Us"><U><B>About Us</B></U></A></div> <div> <A HREF="id30.htm" TARGET="_top" TITLE="LAW OFFICE OF ELIAS M. GORDAN Links"><U><B>Links</B></U></A></div> <div> <A HREF="id26.htm" TARGET="_top" TITLE="LAW OFFICE OF ELIAS M. GORDAN Contact U"><U><B>Contact Us</B></U></A></div> <bR> <bR> <bR> </td> <td valign="top" BGCOLOR="#FFFFFF" TEXT="#080000"> <div> <B>NEW IL LIEN/BOND LAW CHANGES</B></div> <bR> <div> <B>Public Act 93-562</B> (HB 2493) - changes Public Construction Bond Act to provide that a lien waiver shall not constitute a waiver of the bond claim, unless specifically stated on the waiver.  <B>Effective August 20, 2003.</B></div> <div> <A HREF="http://www.legis.state.il.us/legislation/billstatus.asp?DocNum=2493&GAID=3&DocTypeID=HB&LegID=4322&SessionID=3" TARGET="_top" TITLE="http://www.legis.state.il.us/legislation"><U><U>http://www.legis.state.il.us/legislation/billstatus.asp?DocNum=2493&GAID=3&DocTypeID=HB&LegID=4322&SessionID=3</U></U></A><FONT SIZE="2" COLOR="#000000" FACE="Arial" > </FONT></div> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B>SUMMARY OF PUBLIC CONSTRUCTION LIEN/BOND LAWS</B></div> <bR> <div> Subcontractors on State and local projects in Illinois have three main avenues of relief: liens on public funds, liens against Contractor payment bonds, and the Illinois “prompt payment” statute.</div> <bR> <div> <B>1) </B> <B>Liens on (unpaid) public funds (Illinois Compiled Statutes, chapter 770, section 60/23)</B>.</div> <div>      For text of the law see  <FONT SIZE="2" COLOR="#3366FF" FACE="Arial" ><A HREF="http://www.legis.state.il.us/legislation/ilcs/ilcs3.asp?ActID=2254&ChapAct=770" TARGET="_top" TITLE="http://www.legis.state.il.us/legislation"><U><U>770 ILCS 60/      Mechanics Lien Act.</U></U></A></FONT>   GO TO SECTION 23</div> <bR> <div> While liens cannot be filed in most cases against publicly-owned land, subcontractors and suppliers can assert liens against the <U>unpaid</U> balances due to a contractor on a State or local project.  Some State and local agencies (like IDOT) post contractor payment information on the Internet, to facilitate this.  The clerk or Secretary of the local agency must be notified in person, or by registered or certified mail, delivery limited to addressee only, return receipt requested.  The contractor, and any “upper-tier” subcontractors/suppliers, must be notified in like manner.  Within 90 days (NOT three months) after giving the required notice, the subcontractor or supplier must file suit for an accounting, and serve notice, against the prime contractor, and the party to whom the subcontractor furnished services or materials.  A copy of the complaint must be delivered to the clerk or Secretary of the municipal body, within the same 90-day period.  Additional rules apply to State agencies.  NOTE: “No-lien” contracts, where the subcontractor must waive lien rights to be awarded the subcontract, are usually considered unenforceable, and against public policy, under section 60/1.1.  Lien waivers or releases may still be valid, however.</div> <bR> <div> <B>2) Claims against Contractor payment bonds (Public Construction Bond Act, Illinois Compiled Statutes, chapter 30, section 550).    </B>Amended by Public Act 93-562, 8/20/03 (see above).</div> <div>      Available on the Internet at <FONT SIZE="2" COLOR="#3366FF" FACE="Arial" ><A HREF="http://www.legis.state.il.us/legislation/ilcs/ilcs3.asp?ActID=541&ChapAct=30" TARGET="_top" TITLE="http://www.legis.state.il.us/legislation"><U><U>30 ILCS 550/      Public Construction Bond Act.</U></U></A></FONT> </div> <bR> <div> The statute requires all contractors on State or local projects over $5000, to provide a surety bond, for the completion of the contract, and for the payment of labor and materials furnished under contract to the prime contractor or subcontractors.  Suits involving claims against the payment bond must be filed after 120 days of the date of last work, or the furnishing of the last materials (exceptions may permit filing before the end of the 120-day period).  A verified notice of this claim must be filed with the “officer, board, bureau, or department awarding the contract”, within 180 days of the date of last work, or the furnishing of the last materials.  The contractor must then be notified within ten days of notifying the agency.  Section 550/2 specifies the format to use.  If the project is accepted by the State or municipality, suit must be filed within six months of acceptance, in addition to the other time limits.</div> <bR> <div> <B>3) The Illinois Local Government Prompt Payment Act (Illinois Compiled Statutes, chapter 50, section 505), and the State Prompt Payment Act (Illinois Compiled Statutes, chapter 30, section 540).</B>  </div> <div>      Available on the Internet at </div> <div> <FONT SIZE="2" COLOR="#3366FF" FACE="Arial" ><A HREF="http://www.legis.state.il.us/legislation/ilcs/ilcs3.asp?ActID=725&ChapAct=50" TARGET="_top" TITLE="http://www.legis.state.il.us/legislation"><U><U>50 ILCS 505/      Local Government Prompt Payment Act.</U></U></A></FONT> (Municipalities)</div> <div> <FONT SIZE="2" COLOR="#3366FF" FACE="Arial" ><A HREF="http://www.legis.state.il.us/legislation/ilcs/ilcs3.asp?ActID=539&ChapAct=30" TARGET="_top" TITLE="http://www.legis.state.il.us/legislation"><U><U>30 ILCS 540/      State Prompt Payment Act.</U></U></A></FONT> (State)</div> <bR> <div> Both statutes require the contractor on the State or local agency project, upon payment by the agency, to pay each subcontractor or materials supplier, in proportion to the work completed by each one, minus any retention.  An exception applies if the Contractor has rejected the subcontractor work or supplier materials.  If the Contractor, without reasonable cause, fails to pay its subcontractors and materials suppliers within fifteen (15) days after receiving payment under the public construction contract, the contractor must pay interest, at the rate of 2% per month, from the end of the 15-day period, until the amount is fully paid.  The same rule applies if “higher-tier” subcontractors and suppliers get paid, and fail to pay their “lower-tier” subcontractors and suppliers, after a 15-day period.</div> <bR> <div> <B>In addition to the above three measures, subcontractors may also sue their contractor in a breach-of-contract action, assuming that they have not given up their rights to sue under the contract.</B></div> <div> <B>Because construction disputes can be very fact-intensive, an attorney’s assistance is recommended at the first sign of a problem, before time limits are missed and rights lost.  Subcontractors can greatly facilitate their work (and the attorney’s work) with careful and organized record-keeping.</B></div> <div> <B>Please </B><FONT SIZE="2" COLOR="#0000BF" FACE="Arial" ><A HREF="id26.htm" TARGET="_top" TITLE="LAW OFFICE OF ELIAS M. GORDAN Contact U"><U><B>contact our office</B></U></A></FONT><B>, or call us at 708.923.9735, if you have further questions on these issues.</B></div> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B>DISCLAIMER</B></div> <div> The information contained in this guide is meant only to convey general information, and is not intended to serve as legal advice or counsel, nor is it meant to create an attorney-client relationship.  The information presented here is subject to change or modification that any time without notice, and may not apply to the specific facts of your case.  Accordingly, you should check with a with an attorney before acting on this information, to make sure that it applies to your situation.</div> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B>Law Office of Elias M. Gordan, </B><FONT SIZE="3" COLOR="#0000BF" FACE="Times New Roman" ><A HREF="http://www.gordanlaw.com" TARGET="_top" TITLE="http://www.gordanlaw.com"><U><B>http://www.gordanlaw.com</B></U></A></FONT><B> </B></div> <div> <B>Post Office Box 60, Palos Park, IL, 60464   </B><FONT SIZE="3" COLOR="#0000BF" FACE="Times New Roman" ><A HREF="mailto:gordanlaw@att.net" TARGET="_top" TITLE="mailto:gordanlaw@att.net"><U><B>email gordanlaw@att.net</B></U></A></FONT></div> <bR> <div> <A HREF="index.htm" TARGET="_top" TITLE="HOME PAGE LAW OFFICE OF ELIAS M. GORDAN"><U><B>BACK TO HOME PAGE</B></U></A></div> <bR> <bR> </td> </tr></table></body>