What Constitutes Proper Service of a Notice of a Subcontractor’s 90 day Notice and Claim for Lien

By: James P. Ziegler

The Illinois Mechanic’s Lien Act requires a subcontractor or material supplier who does not enjoy a direct contractual relationship with the owner of real estate serve what is commonly referred to as a subcontractor’s notice and claim for lien to perfect its right to a mechanic’s lien. (There are some limited exceptions to this requirement.) This must be done within 90 days of the last date of work or the last date of delivery of materials on the construction project. The Mechanic’s Lien Act itself provides for two permitted ways to serve this notice.

The notice and claim for lien may be sent by registered or certified mail, with return receipt requested, and delivery limited to addressee only, or may be personally served on the owner of record or his agent or architect and to the lending agency if known. The Mechanics Lien Act also provides notice served by registered or certified mail is considered served at the time of its mailing. See 770 ILCS 60/24.

The recent case of National City Mortgage v. Hillside Lumber Inc. 2012 Il App.(2d) 101292 (2012). discussed this requirement and the provisions of the Mechanic’s Lien Act that provide notice is deemed served when mailed. Hillside Lumber Inc. claimed a mechanic’s lien and National City Mortgage was foreclosing a mortgage on the same parcel of property. On cross motions for summary judgment Hillside Lumber Inc. submitted an affidavit claiming it complied with the Mechanics Lien Act and duly sent the notice and claim for lien by certified mail, return receipt requested, and delivery limited to addressees only to the owner of the property, the contractor and to National City Mortgage at its address in Miamisburg Ohio. National City Bank filed a counter affidavit indicating National City Bank had no record of ever receiving the notice and claim for lien.

Hillside Lumber Inc. admitted it did not have either the white card evidencing a certified mailing with a tracking number, a copy of the envelope addressed to National City Bank, or a green card evidencing receipt of the notice and claim for lien by National City Bank.

Hillside Lumber Inc. argued it had created a factual issue with its affidavit indicating proper mailing and that the statute itself provided service was effective upon mailing and was not contingent upon receipt. The Appellate Court rejected this argument. The Court seems to hold if Hillside Lumber Inc. had been able to produce the written records demonstrating it had in fact properly mailed the notice and claim for lien it would have been successful and actual receipt of the notice and claim for lien would not have been required. However given the fact that National City Bank denied receipt of the notice and claim for lien and Hillside Lumber Inc. could not support its affidavit with any written documentation proving it had properly mailed the notice and claim for lien, it was then incumbent on Hillside Lumber Inc. to prove actual receipt of that notice. Since Hillside Lumber Inc. could not and did not provide that proof, its lien was deemed improper at least as to National City Bank.

The reasoning of the Appellate Court is somewhat contrived. The plain language of the Mechanic’s Lien Act indicates notice is deemed served when properly mailed. The case distinguished by the Appellate Court, People ex re. Devine v. $30,000l00 United States Currency 199 Ill.2d 142 (2002) seems to hold provisions in statutes that provide notice is effective upon mailing are enforceable. It is probable the Appellate Court in National City Mortgage v. Hillside Lumber Inc. simply did not believe Hillside Lumber Inc. actually properly mailed the notice. In any event subcontractors and material suppliers should be careful to preserve written proof of proper mailing of these notices.