The Trusted Adviser
June 2011 | Volume 4 • Number 4



Mechanic's Liens

National City Mortgage v Bergman, 405 Ill App 3d 102, 939 NE2d, 345 Ill Dec 272 (2d D 2010).

Facts:On May 10, 2006, Michael Bergman contracted with Enterprise to build a house on his property. On May 23, 2006, Bergman obtained a loan from National City, secured by a mortgage on the property. On June 15, 2006, National City recorded the mortgage in Lake County. On October 11, 2007, Enterprise recorded an "Original Contractor's Claim for Mechanic's Lien" with Lake County that did not contain the date that Enterprise had last provided labor and materials for improvements to the property.

On November 29, 2007, National City filed for foreclosure against Bergman and named Enterprise as codefendant due to the mechanic's lien. National City alleged that Enterprise's lien was subordinate to the mortgage because the lien claim did not contain a completion date. Enterprise counterclaimed to foreclose on its lien for $226,730 and asserted the superiority of its claim over the mortgage because the work performed enhanced the value of the property.

National City filed for summary judgment, and the trial court granted the motion. The trial court relied onMerchants Environmental Industries, Inc. v SLT Realty Ltd. Partnership, 314 Ill App 848, 731 NE2d 394, 246 Ill Dec 866 (2000), in finding that although Section 7 of the Mechanics Lien Act did not expressly require a completion date, one must be inferred. Subsequently, the court entered a judgment of foreclosure and sale and confirmed the sale in August 2009. Enterprise appealed the orders for summary judgment and sale confirmation.

Holding:Reversed and remanded. The appellate court declined to follow the First District's holding in Merchants (the trial court was bound by appellate court precedent) because the analysis ignored statutory-construction and equitable principles and misread the case law. The appellate court looked toFirst Federal Savings & Loan Ass'n of Chicago v Connelly, 97 Ill 2d 242, 454 NE2d 314, 73 Ill Dec 454 (1983), for the principle that mechanics' lien statutes must be strictly construed, and strict construction required only the inclusion of the statute's requirements.

Accordingly, the appellate court found nothing in Section 7 that required a claimant to state the date of the completion of the contract. Further, the fact that Section 11 does require a completion date indicated that the legislature intended for the completion date to be indentified only when a lawsuit seeking to foreclose a lien is commenced, not necessarily in the lien claim itself. The court also found it was inequitable to hold a lien claim unenforceable because it failed to assert a completion date when the lien holder had complied with the statutory requirements.

The appellate court concluded that Enterprise's lien contained all the information required under Section 7, reversed the grant of summary judgment and confirmation of sale, and remanded the case.










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[Last update: 5-24-11]