Construction Litigation

Where all attempts at resolving construction disputes have failed, parties will proceed to State or Federal Court, or in certain cases to Arbitration or Mediation, in order to resolve such disputes. Where a Mechanics Lien has been filed, the filing contruction professional has a few choices:

  • File a suit to foreclose the Mechanics Lien
  • File a breach of contract lawsuit to collect
  • File a combined suit to foreclose and collect

Each choice has a different outcome and expense profile:

Breach of Contract/Unjust Enrichment actions are often the least expensive and fastest way to arrive at a judgment. This is especially true if the amount at issue is less than $15,000 and the dispute ends up in Small Claims Court. Best of all, that court action can proceed while a separately filed Mechanics Lien remains on the subject property, resulting in double pressure on the property owner.

Mechanics Lien Foreclosure actions are generally the most expensive and most involved way to proceed. However, such actions are also the most likely to get results, as the conclusion of the case yields an actual foreclosure and sale of the subject property in order to pay down the Mechanics Lien claim. This is a result tha most homeowners will avoid at any cost.

Below find more information and links that can help you decide if construction litigation is something you need to explore.

Construction Client Intake Form [pdf]

Critical Documents to Be Executed and Dates to be Observed on Construction Projects

This discussion will:

(a) Point out general factors affecting a contractor's, subcontractor's or material supplier's right to payment
(b) Put forth time limits to be observed in order to preserve the contractor's, subcontractor's or supplier's right to payment
(c) Provide checklists that can be used and referred to as jobs progress
(d) Provides a timetable that can be incorporated into the construction schedule for a job

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Waving Lien Rights Related to Oral and Written Change Orders

The standard lien waiver provided by Chicago Title (f.1722 R5/96) says the signer accepts payment for all work and materials including extras, which include but are not limited to change orders, both oral and written, to the contract. While a change order is generally understood to mean any deviation from the original scope or specifications of a construction contract, Illinois law states that only written change orders are enforceable, and then only when they comply with the so-called Watson Requirements: That is, when:

(a) The work and materials constituting the extra was outside the scope of the contract...

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Securing Sale-Tax Exemptions on Federal Construction Projects

ISSUE: How can a contractor secure an exemption from sales and use taxes for itself and its subcontractors in connection with a Federal building project?

ANSWER: The contractor may use its existing, State-issued, tax exemption number.

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5 Methods of Project Planning

Five different methods are available to an owner of a property who has decided to embark on a construction project. They are:

Traditional Approach: the owner hires a design professional and a general contractor who in turn, hires the various trade subcontractors.

Fast Track Approach: the owner decides that the paramount factor is the speedy completion of the project.

Single Source Design Builder: who will not only design the construction project for the owner, but also will construct the project according to its design...

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Preventing Contractors, Subcontractors and Suppliers from Claiming to be Owed Additional Sums for Change Orders

Placing a notation on a check such as Payment in Full, etc. will not prevent the party cashing the check from returning with additional claims for extras, change orders, etc.

Instead, the paying contractor or owner issuing a check should collect signed lien waivers beforehand and tie that checks as closely as possible to those waivers...

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False Promises of Payment and Making Downstream Payments When Paid

The Illinois Mechanics Lien Act (Act) provides that any party that fraudulently induces a waiver is guilty of a misdemeanor. In addition, any party that receives funds is a trustee responsible to ensure the delivery of funds to its intended recipient.

Promising payment to induce lien waiver:

S21.01 of the Act provides that...

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