February 1, 2016
The Illinois Mechanic’s Lien Act clearly provides that architects, structural engineers, professional engineers (i.e. civil engineers) and surveyors have a lien if they provide “any services or incur any expense” in, for or on a lot or tract of land for the purpose of improving the property. For some reason the Illinois Appellate Courts don’t want to recognize this language of the Act and continue to hold that these professionals have to show their services improved the property before they can have a lien. I addressed this issue in the August, 2010 issue of this newsletter. Just recently a majority opinion of the Illinois Appellate Court, Third District, got it wrong again.
In this most recent smack down for architects and engineers, a civil engineering firm did preliminary engineering and performed land surveying services for a preliminary and final plat. The development did not proceed. The civil engineering firm claimed a lien for its services and filed a lawsuit to foreclose its lien. The Bank holding a mortgage on the property sought dismissal of the engineer’s lien. A motion for summary judgment was granted in the Bank’s favor on the ground the civil engineering and land surveying services provided did not constitute an improvement to the property. The civil engineering firm appealed.
The majority of the Appellate Court upheld the trial court and again relied upon a line of decisions that hold the purpose of a mechanic’s lien is to permit a lien where a benefit has been received by the owner and where the value or condition of the property has been increased or improved by reason of the furnishing of labor and materials. The Court’s reasoning is wrong. What the Appellate Court failed to realize is that the line of decisions relied upon are the typical situation where a contractor or subcontractor furnishes labor and materials to a job. Architects and engineers don’t furnish the usual type of materials and labor. They provide designs and drawings but they do so for the purpose of improving land and the Act specifically states they have a lien for the type of services they provide. The fact that a development doesn’t go forward doesn’t mean the services were not provided for the purpose of improving the property.
One Judge dissented and this judge got it right. The dissent stated the appropriate inquiry is whether the services were provided “for the purpose of improving the subject property.” This Judge referenced the specific language of the Act and stated the Act allows architects and engineers to have a lien regardless of whether the services actually improve the property. The dissent referred to the fact the engineering services were used to obtain financing and municipal approval for the development. As this Judge stated, “Professionals who design buildings and developments should not be penalized for an owner’s choice not to proceed with a construction project.”
In my opinion this Appellate Court decision is flat out wrong since it ignores the explicit language of the Illinois Mechanic’s Lien Act. Hopefully this engineering firm will petition the Illinois Supreme Court to allow a further appeal to our State’s highest Appellate Court. This is a significant issue and should be addressed by our Supreme Court. Hopefully they will read the Act and enforce the Act’s explicit provisions in favor of design professionals.