A Few Final Points About Section 5 Statements - Weydert v. Kammes, Part 2
2009 has been an exciting year for Section 5 of the Illinois Mechanics Lien Act. The Illinois Supreme Court’s Weather-Tite decision set the record straight regarding the failure of an owner to withhold the funds delineated in a Section 5 statement, and the 2nd District’s recent case of Weydert Homes, Inc. v. Kammes, is reiterating some of the other basic rules regarding the Section 5 statement.
Apart from holding that the Section 5 statement must be sealed/signed by an officiant as we discussed yesterday, Weydert is worth reading for the court’s discussion of a few other salient points:
- Perfection of the lien claim is not tied to providing a Section 5 statement. Whether or not an owner has requested the statement and whether or not it has been provided by the contractor are irrelevant issues to determining whether the lien is properly recorded under the statute.
- Provision of a Section 5 statement is predicate to enforcing the lien claim. The court refused in Weydert to address the absurdity of an owner continually requesting Section 5 statements to preclude a valid foreclosure by the GC. The holding did reaffirm the notion that the failure to provide the statement upon a valid request would defeat a lien claim.
- An owner must require the statement before paying the contractor any monies. This means that asking for the statement and then paying money before the statement is received may waive the protections.
- The failure to provide the Section 5 statement may not preclude a claim for breach of contract or quantum meruit if the owner is not prejudiced by the possibility of additional, undisclosed, subcontractor claims arising after the enforcement of breach of contract or quantum meruit actions have begun.
