Engineering Services Are Lienable Improvements Even in the Predevelopment Phase

February 13, 2017

The Illinois Supreme Court recently reversed a 3rd District Appellate Court decision and extended protection to design professionals under the Illinois Mechanics Lien Act (the “Act”). The Court decided that an engineering firm’s predevelopment services supplied to an unfinished real estate project were still lienable under the Act, even though the services did not actually physically alter the land or improve the property’s value.

In the case of Burke Engineering, Ltd., v. Heritage Bank of Central Illinois, 2015 IL 119855, Burke Engineering (“Burke”) was hired by Glen Harkins to survey a tract of land and to draft and record a plat of property for a subdivision in Peoria County. Burke started its work, which included recording the plat, conducting a wetlands survey, and planning roads and utilities, but Burke never received its due compensation of $109,549.69. As a result, Burke recorded a mechanics lien on the property and filed suit to foreclose on the lien against the owner and Heritage Bank, who had provided financing to Harkins.

The trial court found that Burke’s services weren’t properly lienable under the Act and granted summary judgment in favor of the lender on the basis that Burke did not actually improve the property or increase its value. The circuit court further reasoned that the property owner did not knowingly induce Burke’s work or receive any benefit from it, further negating the validity of the lien. The 3rd District Appellate Court affirmed the trial court’s decision.

On appeal, the Illinois Supreme Court reversed the appellate court’s decision. The Court considered the purpose underlying the Illinois Mechanics Lien Act and what constitutes a lienable improvement. Section 1(a) of the Act confers lien rights on anyone contracting with a property owner for improvements. The Act defines the word “improve” as including the furnishing of “labor, services, material, fixtures, apparatus or machinery, forms or form work in the process of construction or for services as an architect, structural engineer, professional engineer, land surveyor or property manager.” See 770 ILCS 60/1(a). The Illinois Supreme Court held that this language in Section 1 of the Act provides a lien for engineering services if the services are completed “for the purpose of improving the property.”

Under this reading, the Illinois Supreme Court found that the plaintiff’s services of (1) creating a plat of subdivision, (2) surveying the property, and (3) planning out roads and sewers were all performed for the purpose of allowing the owner to eventually develop the property. If an actual physical improvement was required in order for an engineer to secure a lien, the Court reasoned that “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,” and such a result “is contrary to the protective purpose of the Act.”

This is a significant, favorable decision in favor of contractors, as it expands protection for lien claimants who perform services on uncompleted projects, even if the services do not physically alter the property or increase its dollar value. In short, predevelopment work can still be lienable under the Act.

Whether working on new construction projects or seeking compensation for services rendered, qualified and experienced attorneys can help you avoid lengthy legal entanglements. You can find these legal professionals at Rock Fusco & Connelly, LLC.

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