February 1, 2016
In the February issue of this newsletter I wrote about an Illinois Appellate Court decision that dealt with the lien rights of design professionals. The article was “Another Appellate Court Smack Down for Architects and Engineers.” The Appellate Court held that design professionals can only have a lien if their services increase the value of the property or the property has actually been improved by reason of their services. I stated this decision was “flat out wrong” since it was contrary to the explicit language of the Illinois Mechanic’s Lien Act. As I previously informed you this case was further appealed to the Illinois Supreme Court. I am pleased to advise you our Supreme Court reversed the Appellate Court. This is a major victory for architects, structural engineers, professional engineers and surveyors.
As you will recall this case involved a civil engineering firm who did preliminary engineering and performed land surveying services for a preliminary and final plat. The development did not proceed. In a contest between the mortgage lender and the engineering firm both the trial court and the Appellate Court ruled that since the development did not proceed there was no increase in the value of the property and no physical improvement was made. Accordingly the engineer had no lien. The trial and Appellate Court ignored the explicit language of the Act that provides design professionals have a lien if they provide “any services or incur any expense” if it is for the purpose of improving a lot or tract of land. Fortunately, the Illinois Supreme Court did not ignore the language of the Mechanic’s Lien Statute and specifically referred to it in reversing the Appellate Court decision on this issue.
The Illinois Supreme Court stated, “If a physical improvement is required for an engineer to secure a lien for their work, then these professionals would be subject to the whims of the parties with whom they contract, who may decide to complete the project or not. Such an outcome is contrary to the protective purpose of the Act.” In rendering its decision the Illinois Supreme Court seemed a little taken aback by the Appellate Court’s position that a physical improvement or increase in property value had to exist before a design professional had a lien. The Supreme Court cited to a decision it rendered way back in 1900, Freeman v Rinaker and another it rendered in 1930 Crowen v Meyer and said both decisions stand for the proposition that a design professional is entitled to a lien if the services provided are rendered for the purpose of improving property. The Illinois Supreme Court stated it saw no reason to depart from this rule.
I have represented several architects and engineers and have confronted this same issue. In most cases a design professional’s need to assert a lien arises when the project doesn’t proceed. In these situations there is no physical improvement to the property and while there may be an increase in the property’s value it can be difficult to quantify and prove. I have advocated for the position that the Illinois Supreme Court has now ruled is the law under the Illinois Mechanic’s Lien Act. I am very pleased that the Illinois Supreme Court got it right. There is now an Illinois Supreme Court decision that upholds the specific language of the Act in favor of design professionals – FINALLY!