ILLINOIS MECHANIC'S LIENS [public PROJECTS]
The primary difference between private and public mechanics lien claims is that the mechanics lien for private projects constitutes a lien against the actual real estate itself, whereas a lien claim against a public project is actually a lien against the funds (money) the governmental body has appropriated and has available to pay for the project. The lien does not attach to the government-owned real estate itself. In addition to lien rights, contractors usually have rights to make a claim against a surety bond issued relative to the public project.
Section 23 of the Act governs mechanics lien claims pertaining to state and non-state public governmental construction projects (including some public-private partnership projects). It contains different rules and procedures than those for other mechanics liens. There is no distinction made between types of contractors; they are all called contractors and follow the same procedures for public lien claims.
The Public Construction Bond Act (30 ILCS 550, et. seq.) governs bond claims and contains deadlines and procedures which are completely separate from Section 23 of the (lien) Act. In general, the Bond Act provides that all state public projects costing over $50,000 have a bonding requirement. A bond is essentially an insurance policy purchased to guarantee the completion of the public project (a completion bond), and the payment for the costs to complete the public project (a payment bond).
The key aspect of public liens is to prepare and serve notice of the contractor’s lien claim to the proper governmental entity in accordance with Section 23 of the Act before such entity pays out all of the funds for that project. If you wait too long there may be no money left for your claim. In any case a claimant must file a lawsuit for an “accounting” against the proper governmental entity within 90 days after his lien claim was served in order to preserve his rights to the lien.
Likewise, a bond claim must be drafted carefully and served in accordance with the Bond Act. A claimant must file his bond claim within 180 days of his completion date, and faces a one-year limitations period in which to file a lawsuit, if one proves necessary, which is usually the case.
Because of these different timing requirements, it is important to synchronize the service of the lien and bond claims and the filing of the lawsuit. Typically a lawsuit regarding a public project lien contains an action for an accounting pertaining to the lien claim, an action against the bond, and a breach of contract action against the other contracting party (usually but not always the general contractor).
The Miller Act (40 U.S.C. §§ 3131-3134) governs bond claims for federal public projects costing more than $100,000. It has different requirements and procedures but they are similar to bond claims regarding state and local public projects.