Wednesday, June 2, 2010

Environmental Consulting / Permitting Work For Real Estate Option Holders May not be Lienable in Illinois

In Mostardi-Platt Associates, Inc. v. Czerniejewski, the Fifth District Illinois Appellate Court affirmed the trial court's dismissal of the plaintiff's mechanics lien claim, where the plaintiff completed "air quality construction permitting and disperson modeling services" for Power Holdings of Illinois, LLC, who had an option to purchase the property at issue.  Case No. 5-09-0339 (May 11, 2010).  The Appellate Court held that plaintiff had not contracted with the "owner" of the land under the Mechanics Lien Act; that the contract between Power Holdings and the owners (Power Holdings was actually assigned this contract from another entity) only authorized feasibility studies, not improvements to the land; and that the services provided by the plaintiff did not result in any improvement to the land or benefit to the owner.

The court analogized the case to L.J. Keefe Co v. Chicago & Northwester Transportation Co, in which a plaintiff subcontractor sought a mechanics lien for its work done under contract to Commonwealth Edison Company, pursuant to a license granted by the owner.  287 Ill. App. 3d 119 (1997).  In that case, the court found that the subcontractor's work was for the sole benefit of Commonwealth Edison Company and did not benefit the land or the landowner, and therefore the subcontractor had no mechanics lien rights against the owner.  Similarly, the Appellate Court in Czerniejewski reasoned that the plaintiff's work benefited the option holder, Power Holdings, not the owner, and did not improve and were not for the purpose of improving the land.

For environmental consultants or engineers facing similar situations, consider the following:

1.  Is my contract with the owner of the property or a mere option holder?

2.  If my contract is with an option holder, does the owner know about my work and has it authorized my work in writing?  Does the written authorization classify appropriately the nature of my work?

3.  If the project is not built, is my work "for the purpose of improving property" or for some other purpose?

4.  What is my risk exposure if I'm not eligible for a mechanics lien for this work?  Should I require more up-front payment as a result?

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