Bond in Lieu of Property - Something New in Mechanics Lien Law
By Douglas M. Karlen
Vice President and Regional Counsel
Chicago Title Insurance Company
Recent legislation creates a new concept in mechanics lien law, namely, a bond in lieu of property. Public Act 99-178 (HB 2635), effective January 1, 2016, adds new Section 38.1 to the Mechanics Lien Act to permit the substitution of a surety bond in lieu of real property in the context of the enforcement or possible enforcement of mechanics lien claims. See new 770 ILCS 60/38.1. By shifting the focus of mechanics lien litigation from the subject real property to the proceeds of a surety bond, the new Section allows owners to refinance construction loans or to sell newly constructed condominium units, single family homes, and commercial developments free and clear of mechanics lien claims.
How does it work?
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