Public Act 101-0296
 
SB0062 EnrolledLRB101 04056 AWJ 49064 b


  
    AN ACT concerning local government.
  
 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:
  
 
 
    Section 5. The Counties Code is amended  by changing Section 
3-5010.8 as follows:
 
    (55 ILCS 5/3-5010.8)
    (This Section may contain text from a Public Act with a 
delayed effective date)
    (Section scheduled to be repealed on January 1, 2022)
    Sec. 3-5010.8. Mechanics lien demand and referral pilot 
program.
    (a) Legislative findings. The General Assembly finds that 
expired mechanics liens on residential property, which cloud 
title to property, are a rapidly growing problem throughout the 
State. In order to address the increase in expired mechanics 
liens and, more specifically, those that have not been released 
by the lienholder, a recorder may establish a process to demand 
and refer mechanics liens that have been recorded but not 
litigated or released in accordance with the Mechanics Lien Act 
to an administrative law judge for resolution or demand that 
the lienholder commence suit or forfeit the lien.
    (b) Definitions. As used in this Section:
    "Demand to Commence Suit" means the written demand 
specified in Section 34 of the Mechanics Lien Act. 
    "Mechanics lien" and "lien" are used interchangeably in 
this Section. 
    "Notice of Expired Mechanics Lien" means the notice a 
recorder gives to a property owner under subsection (d) 
informing the property owner of an expired lien. 
    "Notice of Referral" means the document referring a 
mechanics lien to a county's code hearing unit. 
    "Recording" and "filing" are used interchangeably in this 
Section.
    "Referral" or "refer" means a recorder's referral of a 
mechanics lien to a county's code hearing unit to obtain a 
determination as to whether a recorded mechanics lien is valid. 
    "Residential property" means real property improved with 
not less than one nor more than 4 residential dwelling units; a 
residential condominium unit, including, but not limited to, 
the common elements allocated to the exclusive use of the 
condominium unit that form an integral part of the condominium 
unit and any parking unit or units specified by the declaration 
to be allocated to a specific residential condominium unit; or 
a single tract of agriculture real estate consisting of 40 
acres or less that is improved with a single-family residence. 
If a declaration of condominium ownership provides for 
individually owned and transferable parking units, 
"residential property" does not include the parking unit of a 
specified residential condominium unit unless the parking unit 
is included in the legal description of the property against 
which the mechanics lien is recorded. 
    (c)  Establishment of a mechanics lien demand and referral 
process. After a public hearing, a recorder in a county with a 
code hearing unit may adopt rules establishing a mechanics lien 
demand and referral process for residential property. A 
recorder shall provide public notice 90 days before the public 
hearing. The notice shall include a statement of the recorder's 
intent to create a mechanics lien demand and referral process 
and shall be published in a newspaper of general circulation in 
the county and, if feasible, be posted on the recorder's 
website and at the recorder's office or offices.
    (d) Notice of Expired Lien. If a recorder determines, after 
review by legal staff or counsel, that a mechanics lien 
recorded in the grantor's index or the grantee's index is an 
expired lien, the recorder shall serve a Notice of Expired Lien 
by certified mail to the last known address of the owner. The 
owner or legal representative of the owner of the residential 
property shall confirm in writing his or her belief that the 
lien is not involved in pending litigation and, if there is no 
pending litigation, as verified and confirmed by county court 
records, the owner may request that the recorder proceed with a 
referral or serve a Demand to Commence Suit.
    For the purposes of this Section, a recorder shall 
determine if a lien is an expired lien. A lien is expired if 
the lien is unenforced (if a suit to enforce the lien has not 
been commenced by the lienholder or a counterclaim has not been 
filed by the lienholder (within 2 years after the completion 
date of the contract as specified in the recorded mechanics 
lien. The 2-year period shall be increased to the extent that 
an automatic stay under Section 362(a) of the United States 
Bankruptcy Code stays a suit or counterclaim to foreclose the 
lien. If a work , the completion of extra or additional work, or 
furnishing of extra or additional material under Section 9 of 
the Mechanics Lien Act; if a completion date is not specified 
in the recorded lien, then the work completion date is shall be 
deemed the date of recording of the mechanics lien) and if an 
automatic stay under Section 362(a) of the United States 
Bankruptcy Code does not prohibit a suit or counterclaim to 
foreclose.
    (e) Demand to Commence Suit. Upon receipt of an owner's 
confirmation that the lien is not involved in pending 
litigation and a request for the recorder to serve a Demand to 
Commence Suit, the recorder shall serve a Demand to Commence 
Suit on the lienholder of the expired lien as provided in 
Section 34 of the Mechanics Lien Act. A recorder may request 
that the Secretary of State assist in providing registered 
agent information or obtain information from the Secretary of 
State's registered business database when the recorder seeks to 
serve a Demand to Commence suit on the lienholder. Upon 
request, the Secretary of State, or his or her designee, shall 
provide the last known address or registered agent information 
for a lienholder who is incorporated or doing business in the 
State. The recorder must record a copy of the Demand to 
Commence suit in the grantor's index or the grantee's index 
identifying the mechanics lien and include the corresponding 
document number and the date of demand. The recorder may, at 
his or her discretion, notify the Secretary of State regarding 
a Demand to Commence suit determined to involve a company, 
corporation, or business registered with that office.
    When the lienholder commences a suit  or files an answer 
within 30 days or the lienholder records a release of lien with 
the county recorder as required by subsection (a) of Section 34 
of the Mechanics Lien Act, then the demand and referral process 
is completed for the recorder for that property. If service 
under this Section is responded to consistent with Section 34 
of the Mechanics Lien Act, the recorder may not proceed under 
subsection (f). If no response is received consistent with 
Section 34 of the Mechanics Lien Act, the recorder may proceed 
under subsection (f). 
    (f) Referral. Upon receipt of an owner's confirmation that 
the lien is not involved in pending litigation and a request 
for the recorder to proceed with a referral, the recorder 
shall: (i) file the Notice of Referral with the county's code 
hearing unit; (ii) identify and notify the lienholder by 
telephone, if available, of the referral and send a copy of the 
Notice of Referral by certified mail to the lienholder using 
information included in the recorded mechanics lien or the last 
known address or registered agent received from the Secretary 
of State or obtained from the Secretary of State's registered 
business database; (iii) send a copy of the Notice of Referral 
by mail to the physical address of the property owner 
associated with the lien; and (iv) record a copy of the Notice 
of Referral in the grantor's index or the grantee's index 
identifying the mechanics lien and include the corresponding 
document number. The Notice of Referral shall clearly identify 
the person, persons, or entity believed to be the owner, 
assignee, successor, or beneficiary of the lien. The recorder 
may, at his or her discretion, notify the Secretary of State 
regarding a referral determined to involve a company, 
corporation, or business registered with that office.
    No earlier than 30 business days after the date the 
lienholder is required to respond to a Demand to Commence Suit 
under Section 34 of the Mechanics Lien Act, the code hearing 
unit shall schedule a hearing to occur at least 30 days after 
sending notice of the date of hearing. Notice of the hearing 
shall be provided by the county recorder, by and through his or 
her representative, to the filer, or the party represented by 
the filer, of the expired lien, the legal representative of the 
recorder of deeds who referred the case, and the last owner of 
record, as identified in the Notice of Referral. 
    If the recorder shows by clear and convincing evidence  that 
the lien in question is an expired lien, the administrative law 
judge shall rule the lien is forfeited under Section 34.5 of 
the Mechanics Lien Act and that the lien no longer affects the 
chain of title of the property in any way. The judgment shall 
be forwarded to all parties identified in this subsection. Upon 
receiving judgment of a forfeited lien, the recorder shall, 
within 5 business days, record a copy of the judgment in the 
grantor's index or the grantee's index.
    If the administrative law judge finds the lien is not 
expired, the recorder shall, no later than 5 business days 
after receiving notice of the decision of the administrative 
law judge, record a copy of the judgment in the grantor's index 
or the grantee's index.
    A decision by an administrative law judge is reviewable 
under the Administrative Review Law, and nothing in this 
Section precludes a property owner or lienholder from 
proceeding with a civil action to resolve questions concerning 
a mechanics lien.
    A lienholder or property owner may remove the action from 
the code hearing unit  to the circuit court as provided in 
subsection (i).
    (g) Final administrative decision. The recorder's decision 
to refer a mechanics lien or serve a Demand to Commence Suit is 
a final administrative decision that is subject to review under 
the Administrative Review Law by the circuit court of the 
county where the real property is located. The standard of 
review by the circuit court shall be consistent with the 
Administrative Review Law.
    (h) Liability. A recorder and his or her employees or 
agents are not subject to personal liability by reason of any 
error or omission in the performance of any duty under this 
Section, except in the case of willful or wanton conduct. The 
recorder and his or her employees or agents are not liable for 
the decision to refer a lien or serve a Demand to Commence 
Suit, or failure to refer or serve a Demand to Commence Suit, 
of a lien under this Section.
    (i) Private actions; use of demand and referral process. 
Nothing in this Section precludes a private right of action by 
any party with an interest in the property affected by the 
mechanics lien or a decision by the code hearing unit. Nothing 
in this Section requires a person or entity who may have a 
mechanics lien recorded against his or her property to use the 
mechanics lien demand and referral process created by this 
Section.
    A lienholder or property owner may remove a matter in the 
referral process to the circuit court at any time prior to the 
final decision of the administrative law judge by delivering a 
certified notice of the suit filed in the circuit court to the 
administrative law judge. Upon receipt of the certified notice, 
the administrative law judge shall dismiss the matter without 
prejudice. If the matter is dismissed due to removal, then the 
demand and referral process is completed for the recorder for 
that property. If the circuit court dismisses the removed 
matter without deciding on whether the lien is expired and 
without prejudice, the recorder may reinstitute the demand and 
referral process under subsection (d).
    (j) Repeal. This Section is repealed on January 1, 2022. 

(Source: P.A. 100-1061, eff. 1-1-19.)
 
 
    Section 99. Effective date. This Act takes effect upon 
becoming law.