Illinois Prohibits Subordination of Mechanic’s Liens on Construction Projects


Illinois Governor Pat Quinn recently signed into law Senate Bill 3023 (Public Act 98-764, amending the Illinois Mechanics Lien Act, 770 ILCS 60/ et seq., to provide protection against subordination of mechanics liens on Illinois construction projects. S.B. 3023 makes an express or implied agreement to subordinate a mechanic’s lien, where the agreement is in anticipation of and in consideration for the awarding of a contract or subcontract to perform work or supply materials for an improvement upon real property against public policy and unenforceable, except where the agreement to subordinate a mechanic’s lien to a mortgage lien that secures a construction loan if that agreement is made after more than 50% of the loan has been disbursed to fund improvements to the property. The new law was effective July 16, 2014. This new law represents the culmination of the Illinois legislative efforts over the past few legislative sessions to provide further protection to mechanics lien claimants.