Bill that Assists Property Owners and Contractors Signed into Law

Governor Rauner has signed into law a bill sponsored by State Representative Ron Sandack (R-Downers Grove) that provides protections for property owners who have existing mechanics liens on their property.

HB2635, now PA 99-0178, allows landowners to replace a mechanics lien with a surety bond, which would allow the landowner to sell or refinance their property. Typically, when a contractor or subcontractor does not get paid for work done for a landowner, they place a mechanics lien on the property as a means for ensuring payment. If the landowner tries to sell the property at a later date, the lien would have to be settled before a sale could occur. “Unfortunately, there are instances when property owners have work done to prepare a house for sale and are overcharged by disreputable contractors,” said Sandack. “While the claim is being disputed, interested buyers have walked away because the sale could not be completed due to the lien.”

According to the provisions of the new law, a property owner may replace a lien with a surety bond equal to 175% of the lien claim. “Home sales or refinances will no longer be held up in cases of contractual disputes, and contractors who need to recoup costs associated with completed work have a new guarantee for payment for their services,” Sandack said. “The new law adds a much-needed layer of efficiency to the process and allows the economic benefits associated with home sales and refinances not to be stalled.”

PA 99-0178 will take effect on January 1, 2016.