Built to Suit the Retail Real Estate Industry PlainVanillaShell US Edition You are signed in as  
guest  

Sign in now  

Logout  
topnav
Home News Archive Featured Stories Retail Real Estate Marketplace Contact Us Subscription Info
legal  

legal

Print Page Contractor Loses on Technicality
by Ron Davis

A legal technicality has prevented a building contractor from staking a claim on property at an Illinois shopping center.

The shopping center, located in suburban Chicago, was targeted for a lawsuit by the building contractor following construction at the premises of one of the center’s tenants. That tenant wanted to build a currency exchange facility at the center, and the contractor had bid on the project and won.

The agreed-on amount was $144,000. The contractor soon completed the work, then presented the tenant with a bill of $143,107 for payment in full. However, the tenant paid the contractor only $62,831 of the amount billed.

In response, the contractor filed a lien on the property and included the shopping center owner to the claim against the tenant. But in including the shopping center owner in the lawsuit, the contractor failed to verify the claim with a sworn statement, or affidavit.

Under Illinois law, to enforce a lien against a creditor, a contractor must, among other requirements, verify a claim by affidavit. There was no question that the contractor fulfilled the other legal demands: The president of the contracting firm filed a claim for lien that included a brief statement of the contract, the balance due after allowing all credits, and a sufficiently correct description of the property. Otherwise, he simply stated that he “hereby files a claim for lien” against the shopping center tenant.

An Illinois court, lacking any evidence of the required affidavit, ruled in favor of the shopping center owner. The contractor appealed, arguing that a “hyper-technical” reading of the law would lead to an unfair result.

An appellate court also ruled in favor of the shopping center owner, explaining, “The verification requirement serves an important function. Obtaining a lien entails the relatively simple process of filing a claim with the recorder’s office. However, the recording of such a claim for a lien has significant legal consequences involving the encumbrance of property. By requiring verification of the claim, the law provides that the claimant must make statements in the recorded document under penalty of perjury, which provides a much needed consequence should the claimant file a frivolous claim. The fact that the contractor’s claim was not frivolous, as the contractor unquestionably supplied the materials and performed the work as alleged in the claim, does not change our analysis.” (Tefco Construction Co., Inc. v. Continental Community Bank and Trust Co., 2005 WL 1123638 [Ill.App. 1 Dist.])

Decision: May 2005
Published: May 2005

Privacy Policy | Terms & Conditions | Contact | About Us