Most construction professionals regularly file or dispute mechanic’s liens and feel fairly comfortable dealing with them. However, this experience is often concerning a single building constructed under a single contract. Professionals don’t regularly deal with contracts covering multiple buildings. Therefore, professionals often try to follow the same rules they use to file a single lien on multiple buildings constructed under one contract. Unfortunately, by following the same rules, they often inadvertently give up their lien rights on at least one building.
For example, a general contractor may be asked to construct under one contract two buildings kitty-corner to one another at an intersection. During construction, materials delivered to the project site are jointly used on the two buildings and workers work on both buildings interchangeably. The general contractor completes construction on the first building on Jan. 1, 2019, and completes construction on the second building on Jan. 1, 2020. Based on the completion date of the second building of Jan. 1, 2020, the general contractor provides notice to the owner that it intends to file a mechanic’s lien on the two buildings. The owner refuses to pay and the general contractor files a mechanic’s lien covering both buildings within the necessary statutory period based on the completion date of the second building. Does the general contractor have valid lien rights on both buildings in Missouri or Illinois?
Unfortunately, the general contractor has inadvertently forfeited its lien rights on the first building in Missouri and Illinois. However, the reason for the forfeiture is different for each state, and a prime example of why it is so important to check the state’s mechanic’s lien statute when dealing with multiple buildings on multiple lots.
In order to have mechanic’s lien rights on multiple buildings on multiple lots in Missouri, Missouri requires that those buildings be “united together and situated upon the same lot or contiguous lots, or separate buildings upon contiguous lots” and that they are erected under one general contract. Mo. Ann. Stat. § 429.040. The main question in Missouri is whether the lots are contiguous. Missouri courts have defined contiguous as lots that share a common side. Lots that share only a single corner are not contiguous under Missouri law. Stewart Concrete & Material Co. v. James H. Stanton Const. Co., 433 S.W.2d 76, 80 (Mo. App. 1968). Therefore, in the above example, the general contractor’s lien fails because the lots are not contiguous in that they share only a single corner. In order to have lien rights on both buildings, the general contractor needed to file a mechanic’s lien on the first building within six months of its completion and a separate mechanic’s lien on the second building within six months of its completion.
In order to have mechanic’s lien rights on multiple buildings on multiple lots in Illinois, Illinois requires only one lien statement as long as it is “shown that such material was in good faith delivered at one of these buildings for the purpose of being used in the construction of any one or all of such buildings, or delivered to the owner or his or her agent for such buildings, to be used therein[.]” 770 Ill. Comp. Stat. Ann. 60/7. As Illinois does not require that lots be contiguous, the main question in Illinois when filing a blanket lien is whether the mechanic’s lien was timely filed. Unlike Missouri, which calculates the statutory period for filing a single lien on multiple lots on when the last building was completed, Illinois requires that one file a mechanic’s lien within the statutory period following the completion of the first building and each subsequent building. Barker-Lubin Co. v. Unknown Heirs or Devisees of Barker, 106 Ill. App.3d 89, 90, (4th Dist. 1982). Therefore, the general contractor’s lien on the first building fails because the lien was not timely filed. In order to have lien rights on both buildings, the general contractor needed to file its mechanic’s lien within four months of completion of the first building and then file an updated mechanic’s lien within four months of completion of the second building.
The above example shows the importance of checking mechanic’s lien filing requirements. Midwest contractors likely work in Missouri and Illinois regularly, yet the requirements for filing a blanket mechanic’s lien are different in each state and one could inadvertently give up one’s lien rights if not fully informed. Given the value of lien rights, particularly on projects involving multiple buildings, construction professionals must be sure to check the mechanic’s lien requirements on each project to which it provides labor or materials.