770 ILCS 70/ Oil and Gas Lien Act of 1989.

(770 ILCS 70/1) (from Ch. 82, par. 501)

Sec. 1. Definitions. In this Act unless the context or subject matter otherwise requires:

1. "Construction" means construction, maintenance, operation, or repair.

2. "Contract" means a contract, written or oral, express or implied, or partly express and partly implied, or executory or executed, or partly executory and partly executed.

3. "Drilling" means drilling, digging, perforating, acidizing, cementing, completing, repairing or reworking.

4. "Furnish" means sell or rent.

5. "Labor" means work performed in constructing, putting together, or repairing any of the material used or employed, or furnished to be used or employed, for or preliminary to the drilling, completing, operating or repairing of any oil or gas well, or in the execution, maintenance, operation or repair of a pipeline, including legal, geological, engineering, abstracting and title services.

6. "Leasehold" means the interest of one holding as a lessee or assignee under an oil and gas lease or owner of an interest in oil or gas under which the holder has the right to drill for and produce oil and gas, including the entire working interest.

7. "Material" means material, machinery, equipment, appliances, buildings, structures, tools, bits, or supplies used on any leasehold.

8. "Operator" means a person who is responsible for or assumes the daily supervision and management for operating a leasehold and may be a co-owner of a leasehold interest.

9. "Operating" means all operations in connection with or necessary to the production of oil or gas.

10. "Owner" means a person holding any interest in the legal or equitable title or both to any leasehold for oil or gas purposes, or any pipeline, or his agent, and shall include purchasers under executory contract, receivers, and trustees.

11. "Permittee" means the person to whom a permit is issued for drilling, reopening or conversion of a well by the Department of Natural Resources or the person who is named as principal in the bond required by the Department of Natural Resources.

12. "Person" means an individual, corporation, firm, partnership, or association.

13. "Pipeline" means any pipeline laid and designed as a means of transporting natural gas, oil, or gasoline, or their components or derivatives, and the right of way therefor.

14. "Services" means work performed exclusive of labor, including the hauling of material, whether or not involving the furnishing of materials.

14.5. "Well" means any drill hole required to be permitted under subsection (2) of Section 6 of the Illinois Oil and Gas Act or under Section 12 of that Act.

15. "Working interest" means any interest in or any right to the production of oil or gas, excluding royalty or overriding royalty interests.

(Source: P.A. 91-187, eff. 1-1-00.)

(770 ILCS 70/1.1) (from Ch. 82, par. 501.1)

Sec. 1.1. Short Title. This Act shall be known as the Oil and Gas Lien Act of 1989.

(Source: P.A. 86-377.)

(770 ILCS 70/2) (from Ch. 82, par. 502)

Sec. 2. Persons entitled to lien - amount of lien. Any person, including the operator, who shall, under contract with the owner or operator of any leasehold or of any pipeline, perform any labor or furnish any material or services used or employed, or furnished to be used or employed for, or preliminary to, the drilling, completing, equipping or operating of any oil or gas well upon such leasehold, or in the construction of any pipeline, or in the constructing, putting together, or repairing of any materials so used or employed, or furnished to be used or employed, shall be entitled to a lien under this Act, whether or not a producing well is obtained and whether or not such material is incorporated in or becomes a part of the completed oil or gas well or pipeline, for the amount due him for the performance of such labor or the furnishing of such material or services, including without limitation transportation and mileage charges connected therewith, and interest as provided by the contract between such person and the owner or operator, or if no interest is provided for by contract, from the date of the filing of the lien, at the rate provided for by statute for judgments.

(Source: P.A. 91-357, eff. 7-29-99.)

(770 ILCS 70/3) (from Ch. 82, par. 503)

Sec. 3. Property Subject to Lien.

A. Liens created under Section 2 shall extend to:

1. the leasehold for which the materials or services were furnished, or for which the labor was performed, and the appurtenance thereunto belonging;

2. all materials and fixtures owned by the owner or owners of such leasehold and used or employed, or furnished to be used or employed in the drilling, completing, equipping or operating of any oil or gas well located thereon;

3. all oil or gas wells located on such leasehold, and the oil or gas produced therefrom, and the proceeds thereof inuring to the leasehold therein as such leasehold interest existed on the date such labor was first performed or such material or services were first furnished;

4. all proceeds of production inuring to the leasehold held by any purchaser of such oil and gas; and

5. the whole of the pipeline to which the materials or services were furnished, or for which labor was performed, and all buildings and appurtenances thereunto belonging, including, without limiting the generality of the foregoing, gates, valves, pumps, pump stations, and booster stations, and upon all materials and fixtures owned by the owner of such pipeline and used or employed or furnished to be used or employed in the construction thereof.

B. If materials or services are furnished or labor is performed for only a portion of the leasehold, the lien against the leasehold created by this Act shall be limited to:

1. the minimum surficial acreage for well spacing designated by the permittee for a well drilled thereon described as the establishing drilling unit with the Department of Natural Resources; and

2. if no such designation was made by the permittee prior to the filing of a claim for lien, the minimum surficial acreage for well spacing designated for a well drilled thereon for an established drilling unit described in the claim for lien, which will be designated by the court in the foreclosure proceeding.

C. If materials or services are furnished or labor is performed for leaseholds, the proceeds of which are commingled by common storage or are validly polled or unitized by agreement of the owners thereof or by operation of law or by any order of any agency having jurisdiction thereof, the lien shall extend to all of the leaseholds so commingled by common storage, pooling or unitization.

(Source: P.A. 91-357, eff. 7-29-99.)

(770 ILCS 70/4) (from Ch. 82, par. 504)

Sec. 4. Subcontractor's Lien. Any person who shall, under contract, perform any labor or furnish any material or services as a subcontractor under an original contractor or for or to an original contractor or a subcontractor under an original contractor, shall be entitled to a lien upon all the property upon which the lien of an original contractor may attach to the same extent as an original contractor, and the lien provided for in this Section shall further extend and attach to all materials and fixtures owned by such original contractor or subcontractor to or for whom the labor is performed or material or services furnished and used or employed, or furnished to be used or employed in the drilling, completing or operating of such oil or gas wells, or in the construction of such pipeline. Upon the filing of a subcontractor's lien, the owner may withhold payment to the original contractor in the amount claimed by the lien until the debt on which the lien is based is settled or determined to be not owed. The owner is not liable to the subcontractor for more than the amount that the owner owes the original contractor when notice of the lien is received by the owner.

(Source: P.A. 86-377.)

(770 ILCS 70/5) (from Ch. 82, par. 505)

Sec. 5. Forfeiture or Failure of Title. Forfeiture of a leasehold estate or a judicial finding or abandonment shall not impair any lien as to proceeds of production, material, equipment, fixtures and appurtenances located thereon and to which said lien has attached prior to forfeiture or abandonment or a judicial finding thereof. Failure of an equitable interest to become legal title or nonfulfillment of a condition subsequent on which a legal interest is contingent does not impair a lien on proceeds of production, material, equipment, fixtures and appurtenances, or an improvement located on the land covered by the equitable interest if the lien attached to the proceeds of production, material, equipment, fixtures and appurtenances or improvement before the failure.

(Source: P.A. 86-377.)

(770 ILCS 70/6) (from Ch. 82, par. 506)

Sec. 6. Notice to purchaser of oil and gas. Anything in this chapter to the contrary notwithstanding, any lien claimed by virtue of this Act insofar as it may extend to oil or gas or the proceeds of the sale of oil or gas shall not be effective against any purchaser of such oil or gas until a copy of the recorded claim for lien has been delivered to such purchaser. Such copy shall be delivered personally to the purchaser or by registered or certified mail deposited in the United States mails. Until such copy is delivered as above provided, no such purchaser shall be liable to the claimant for any oil or gas produced from the leasehold upon which the lien is claimed or the proceeds thereof except to the extent of such part of the purchase price of such oil or gas or the proceeds thereof as may be owing by such purchaser at the time of delivery of such written copy of claim for lien. Such purchaser shall withhold payments for such oil or gas proceeds to the extent of the lien amount claimed until delivery of a recorded release of lien from the claimant, receipt of a certified judgment of any court, or the filing of bond provided for by Section 11; provided, however, that such purchaser may release payments for such oil and gas proceeds if a notice of Lis Pendens regarding the suit to foreclose has not been filed with the one-year limitation provided for by Section 12.

(Source: P.A. 86-377.)

(770 ILCS 70/7) (from Ch. 82, par. 507)

Sec. 7. Date lien arises-preference over other encumbrances. The lien provided for in this chapter arises on the date of the furnishing of the first item of material or services or the date of performance of the first labor. Upon compliance with the provisions of Section 10, such lien shall be preferred to all other titles, charges, liens, or encumbrances which may attach to or upon any of the property upon which a lien is given by this Act subsequent to the date the lien herein provided for arises. As to the priority between prior encumbrances and liens filed hereunder, the lien claimant shall be preferred to the extent of the reasonable value of the claimant's labor, material and services if the leasehold or material has been enhanced thereby.

(Source: P.A. 86-377.)

(770 ILCS 70/8) (from Ch. 82, par. 508)

Sec. 8. Party of liens. All liens affixed by virtue of this Act upon the same leasehold shall be of equal preference and priority.

(Source: P.A. 86-377.)

(770 ILCS 70/9) (from Ch. 82, par. 509)

Sec. 9. Continuing deliveries under single contract. All labor performed or materials or services furnished by any person entitled to a lien under this Act upon the same leasehold or the same pipeline shall for the purpose of this Act be considered as having been performed or furnished under a single contract regardless of whether or not the same was performed or furnished at different times or on separate orders, provided that no more than four months shall have elapsed between the date of performance of such labor or the date of furnishing such material or services and the date on which labor is next performed or materials or services are next furnished.

(Source: P.A. 86-377.)

(770 ILCS 70/10) (from Ch. 82, par. 510)

Sec. 10. Contents and filing of statement of lien. Every person claiming a lien under this Act shall file with the Recorder's Office of the county in which such leasehold, or pipeline, or some part thereof, is situated, a statement verified by affidavit which must include:

(1) The name of an owner of the leasehold or pipeline, and the operator, if known, or the "permittee" and such owner's and operator's mailing address, if known.

(2) A legal description of the leasehold to which the lien extends using the description required by Section 3 B, or a legal description of the pipeline involved.

(3) The nature and dates of the labor performed or materials or services furnished.

(4) Said statement of lien must be filed within four months after the date on which the claimant's labor was last performed or materials or services were last furnished under a single contract as provided for in Section 9. In no event shall such statement of lien be effective as to labor performed or materials or services furnished more than 2 years prior to the filing of the statement of lien in the Recorder's Office. A copy of the statement of lien shall be delivered personally to an owner of the leasehold or pipeline, and the operator, if known, or to the permittee, or by registered or certified mail deposited in the United States mails. Failure to serve a copy of such statement of lien shall not in any manner serve to invalidate the same.

(Source: P.A. 86-377.)

(770 ILCS 70/11) (from Ch. 82, par. 511)

Sec. 11. Bond to indemnify against liens.

1. Whenever any lien or liens shall be filed under the provisions of this Act, then any owner or the contractor or subcontractor whom such lien or liens are claimed, or either of them, may file a bond with the Recorder of the county in which the property is located as herein provided. Such bond shall describe the property on which lien or liens are claimed, shall refer to the lien or liens claimed in a manner sufficient to identify them, shall be in the principal amount of the claimed lien or liens referred to, plus 25% thereof, and shall be executed by the party filing same as principal and by a corporate surety authorized under the laws of this State to execute such bonds as surety and shall be conditioned substantially that the principal and surety will pay to the obligees named or their assigns the amounts of the liens so claimed by them with all costs in the event same shall be proven to be liens on such property.

2. Upon the filing of such bond, the Recorder shall send a notice thereof, together with a copy of the bond, to all lien claimants named therein, by registered or certified mail addressed to such lien claimants at the address set forth in their respective claims for lien.

3. Such bond, when filed, and such notice, when mailed, shall be recorded by the Recorder in the oil and gas lien records, and any purchaser or lender may rely upon the record of such bond and notice in acquiring any interest in said property and shall absolutely be protected thereby.

4. In lieu of filing of the bond as provided for herein, a deposit of cash may be made in the amount of claimed lien or liens referred to plus 25% thereof and the same procedure shall be followed by the Recorder as required in the case of filing of a bond. Such bond, or cash deposit when filed, shall take the place of the property against which any claim for lien referred to in such bond is asserted. At any time within the period of time provided in Section 12, any person claiming such lien may sue upon such bond or cash, but no action shall be brought upon such bond after the expiration of such period. One action upon said bond shall not exhaust the remedies thereon but each obligee or assignee of an obligee named therein may maintain a separate suit thereon in any court having jurisdiction.

5. In case the lienholder shall recover in a suit upon the bond or deposit of cash, he shall be entitled to recover a reasonable attorney's fee, to be fixed by the court, which shall be taxed as costs in this action.

(Source: P.A. 86-377.)

(770 ILCS 70/12) (from Ch. 82, par. 512)

Sec. 12. Duration of lien-suit to foreclose. Any lien provided for by this chapter may be enforced by civil action in the circuit court of the county in which the leasehold, or pipeline, or some part thereof, is situated. Such action shall be brought within one year from the time of the filing of the lien statement as provided for in Section 10.

(Source: P.A. 86-377.)

(770 ILCS 70/13) (from Ch. 82, par. 513)

Sec. 13. Parties to suit to foreclose. In such action all persons whose liens are filed as herein provided, other encumbrancers and any owners whose interest is sought to be affected shall be made parties and the issues shall be made and the trials shall be conducted as in other civil cases. Any lien claimant or encumbrancer made a party to such action shall not be required to file any counterclaim or crossclaim but shall set forth as part of such person's answer, within the limitation provided for in Section 12, sufficient facts to indicate that such person has complied with Section 10 in the case of a person claiming a lien, or to indicate the nature and extent of the encumbrance.

(Source: P.A. 86-377.)

(770 ILCS 70/14) (from Ch. 82, par. 514)

Sec. 14. Consolidation of suits to foreclose - intervention. If several actions brought to enforce liens under this Act on the same property be pending at the same time, the court may order them to be consolidated. Any claimant having filed his statement of lien as herein provided shall be entitled to intervene in any pending action brought to enforce a lien on the same property.

(Source: P.A. 86-377.)

(770 ILCS 70/15) (from Ch. 82, par. 515)

Sec. 15. Removal prohibited; injunction; lien follows property wrongfully removed. When any lien provided for by this Act shall have attached to the property covered thereby, it shall be unlawful for any person to remove such property, or any part thereof, or cause the same to be removed from the land or premises where located at the time such lien attached or otherwise dispose of the same without the written consent of the holder of such lien. In the event such property, or some part thereof, is about to be removed or disposed of in violation of this Section, the circuit court of the county where such property, or any part thereof, is located may upon the verified complaint of the holder of such lien enjoin all persons alleged in such complaint to be about to remove or dispose of such property, or some part thereof, from removing or disposing of the same. In the event such property, or any part thereof, shall have been removed or disposed of in violation of this Section, the holder of such lien shall be entitled in any action to foreclose the same to the appointment of a receiver to take possession of such removed or disposed of property wherever the same may be located within this State; provided, however, that this Section shall not preclude the appointment of receiver in actions brought to foreclose liens given by this Chapter upon any equitable grounds warranting such appointment or as provided for by Section 16. This Section shall not apply to any lien claims which have been discharged by the filing of a bond as provided by Section 11.

(Source: P.A. 86-377.)

(770 ILCS 70/16) (from Ch. 82, par. 516)

Sec. 16. Sale pursuant to foreclosure. A. In all actions to enforce a lien under the provisions of this Act, the court shall, for cause, appoint a receiver with the usual powers granted in equity to operate the leasehold, subject to the lien or liens being enforced and, upon request by plaintiff, the court shall appoint a receiver or other person to conduct the sale of the property subject to the lien or liens being enforced.

1. No property, real or personal, shall be sold by virtue of any judgment of foreclosure under this Act, except at public sale, between the hours of 9:00 a.m. and 5:00 p.m., and pursuant to the procedures of this Section

2. The receiver or other person conducting the sale shall give public notice of the sale as follows:

(a) The notice of sale shall include at least the following information, but an immaterial error in the information shall not invalidate the legal effect of the notice:

(1) The case, title, case number and the court in which the foreclosure was filed;

(2) The time and place of the sale;

(3) If the leasehold is sold, a legal description sufficient to identify it with reasonable certainty;

(4) If personalty is sold, a description thereof sufficient to identify it with reasonable certainty, its location and times and place where it may be inspected prior to sale;

(5) The name, address and telephone number of the person conducting the sale;

(6) The terms of the sale; and

(7) Such other information order by the court.

(b) The notice of sale shall be published at least three consecutive calendar weeks (Sunday through Saturday,) once in each week, the first of such notices to be published not more than 35 days prior to the sale, the last such notice to be published not less than 7 days prior to the sale by an advertisement in a newspaper circulated to the general public in the county in which the foreclosure action was brought.

C. The person conducting the sale shall also give notice to all parties in the action who have appeared and have not theretofore been found by the Court to be in default for failure to plead. Such notice shall be given in the manner

provided in the applicable rules of Court for service of papers other than process and complaint, not more than 28 days nor less than 7 days prior to the day of sale. After notice is given as required in this Section, a copy thereof shall be filed in the office of the Clerk of the Court entering the judgment, together with a certificate of counsel or other proof that notice has been served in compliance with this Section.

D. The person conducting the sale shall again give notice in accordance with this Section of any adjourned sale; provided, however, that if the adjourned sale is to occur less than 30 days after the last scheduled sale, notice of any adjourned sale need be given only once, not less than 5 days prior to the date of the adjourned sale.

E. No other notice by publication or posting shall be necessary unless required by order or rule of the Court.

F. Upon sale of any property, the person conducting the sale shall give to the purchaser a certificate describing the property purchased by him or her, showing the amount paid therefor, or if purchased by the holder of the lien or liens being enforced, the amount of his or her bid.

G. There shall be no right of redemption from foreclosure sale under this Act and all rights and equities of redemption from any judgment of foreclosure are barred.

H. The person conducting the sale shall promptly make a report to the court and upon motion and notice in accordance with court rules applicable to motions generally, the court shall conduct a hearing to confirm the sale. If the court finds that notice of the sale required with subsections B, C, D and E were given and that the sale was not conducted fraudulently, the court shall then enter an order confirming the sale and giving possession of the property to the purchaser. The confirmation order may also;

1. approve the receiver's fees and costs arising between the entry of any judgment or order appointing the receiver and the confirmation hearing;

2. provide for a personal judgment against any party for a deficiency.

I. Upon confirmation of the sale, the person who conducted the sale or the court shall execute an instrument to the holder of the certificate of sale sufficient to convey title to the property purchased, which instrument shall identify the court and the caption of the case in which judgment was entered. Signature and recital in the instrument of the title or authority of the person signing the instrument conveying title, of authority pursuant to the judgment and of the giving of the notices required by this Section is sufficient proof of the facts required and of such authority to execute the instrument of conveyance, but such instrument shall not be construed to contain any covenant on the part of the person executing it.

J. The court granting the judgment of foreclosure may make further orders to enforce possession of the property purchased under any sale of foreclosure.

(Source: P.A. 86-377.)

(770 ILCS 70/17) (from Ch. 82, par. 517)

Sec. 17. Allowance of reasonable attorney's fee in foreclosure. In any action brought to enforce a lien prescribed by this Act, unless the defendant interposes a good and substantial defense, any lien claimant for whom judgment is rendered shall be entitled to recover a reasonable attorney's fee, to be fixed by the court, which shall be taxed as costs in the action.

(Source: P.A. 91-187, eff. 1-1-00.)

(770 ILCS 70/18) (from Ch. 82, par. 518)

Sec. 18. Personal action. Nothing in this Act shall be construed to impair or affect the right of any person to whom any debt may be due for work performed or materials or services furnished to maintain a personal action against the person liable for such debt.

(Source: P.A. 86-377.)

(770 ILCS 70/19) (from Ch. 82, par. 519)

Sec. 19. Waivers. The taking of any note or any additional security by any person given a lien by this Act shall not constitute a waiver of the lien unless made a waiver by express agreement of the parties in writing. The claiming of a lien under this Act shall not constitute a waiver of any other right or security held by the claimant unless made a waiver by express agreement of the parties in writing.

(Source: P.A. 86-377.)

(770 ILCS 70/20) (from Ch. 82, par. 520)

Sec. 20. Assignment of liens and actions. All claims for liens and likewise all actions to recover therefor under this Act shall be assignable so as to vest in the assignee all rights and remedies herein given subject to all defenses thereto that might be raised if such assignment had not been made. Where a statement of lien has been filed as herein provided such assignment shall be made by a separate instrument in writing, which shall be recorded in the Recorder's Office where the claim was filed.

(Source: P.A. 86-377.)