HB2615 100TH GENERAL ASSEMBLY

LRB100 07826 HEP 17894 b

100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB2615

Introduced , by Rep. Margo McDermed

SYNOPSIS AS INTRODUCED:

770 ILCS 60/5.1 new

Amends the Mechanics Lien Act. Provides that, with specified exceptions, an owner, contractor, or subcontractor may not, by contract or otherwise, waive, affect, or impair any other claimant's rights unless the claimant executes and delivers a waiver and release under specified conditions and in conformance with specified statutory form language.

A BILL FOR

AN ACT concerning civil law.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Mechanics Lien Act is amended by adding Section 5.1 as follows:

(770 ILCS 60/5.1 new)

Sec. 5.1. Waivers.

(a) This Section applies to a work of improvement governed by this Act.

(b) Notwithstanding any other provision of law, an owner, contractor, or subcontractor may not, by contract or otherwise, waive, affect, or impair any other claimant's rights under this Act, whether with or without notice, and any term of a contract that purports to do so is void and unenforceable except as provided in this Section.

(c) A claimant's waiver and release does not release the owner, construction lender, or surety on a payment bond from a lien or claim unless both of the following conditions are satisfied:

(1) The waiver and release is in substantially the form provided in this Section and is signed by the claimant.

(2) If the release is a conditional release, there is evidence of payment to the claimant. Evidence of payment may be either of the following:

(A) The claimant's endorsement on a single or joint payee check that has been paid by the financial institution on which it was drawn.

(B) Written acknowledgment of payment by the claimant.

(d) An oral or written statement purporting to waive, release, impair, or otherwise adversely affect a lien or claim is void and unenforceable and does not create an estoppel or impairment of the lien or claim unless either of the following conditions is satisfied:

(1) The statement is pursuant to a waiver and release under this Section.

(2) The claimant has actually received payment in full for the claim.

(e) A claimant may reduce the amount of, or release in its entirety, a stop payment notice. The reduction or release shall be in writing and may be given in a form other than a waiver and release form provided in this Section. The writing shall identify whether it is a reduction of the amount of the stop payment notice, or a release of the notice in its entirety. If the writing is a reduction, it shall state the amount of the reduction, and the amount to remain withheld after the reduction. A claimant's reduction or release of a stop payment notice has the following effect:

(1) The reduction or release releases the claimant's right to enforce payment of the claim stated in the notice to the extent of the reduction or release.

(2) The reduction or release releases the person given the notice from the obligation to withhold funds pursuant to the notice to the extent of the reduction or release.

A reduction or release under this subsection does not preclude the claimant from giving a subsequent stop payment notice that is timely and proper. The reduction or release does not release any right of the claimant other than the right to enforce payment of the claim stated in the stop payment notice to the extent of the reduction or release.

(f) This Section does not affect the enforceability of either an accord and satisfaction concerning a good faith dispute or an agreement made in settlement of an action pending in court if the accord and satisfaction or agreement and settlement make specific reference to the lien or claim.

(g) If a claimant is required to execute a waiver and release in exchange for, or in order to induce payment of, a progress payment and the claimant is not, in fact, paid in exchange for the waiver and release or a single payee check or joint payee check is given in exchange for the waiver and release, the waiver and release is null, void, and unenforceable unless it is in substantially the following form:

CONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT NOTICE: THIS DOCUMENT WAIVES THE CLAIMANT'S LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS EFFECTIVE ON RECEIPT OF PAYMENT. A PERSON SHOULD NOT RELY ON THIS DOCUMENT UNLESS SATISFIED THAT THE CLAIMANT HAS RECEIVED PAYMENT.

Identifying Information Name of Claimant:............................................ Name of Customer:............................................ Job Location:................................................ Owner:....................................................... Through Date:................................................

Conditional Waiver and Release

This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for labor and service provided, and equipment and material delivered, to the customer on this job through the Through Date of this document. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. This document is effective only on the claimant's receipt of payment from the financial institution on which the following check is drawn: Maker of Check:.............................................. Amount of Check: $........................................... Check Payable to:............................................

Exceptions This document does not affect any of the following:

(1) Retentions.

(2) Extras for which the claimant has not received payment.

(3) The following progress payments for which the claimant has previously given a conditional waiver and release but has not received payment:

Date(s) of waiver and release:.......................

Amount(s) of unpaid progress payment(s): $...........

(4) Contract rights, including: (i) a right based on rescission, abandonment, or breach of contract; and (ii) the right to recover compensation for work not compensated by the payment.

Signature Claimant's Signature:........................................ Claimant's Title:............................................ Date of Signature:...........................................

(h) If the claimant is required to execute a waiver and release in exchange for, or in order to induce payment of, a progress payment and the claimant asserts in the waiver that the claimant has, in fact, been paid the progress payment, the waiver and release shall be null, void, and unenforceable unless it is in substantially the following form, with the text of the "Notice to Claimant" in at least as large a type as the largest type otherwise in the form:

UNCONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT NOTICE TO CLAIMANT: THIS DOCUMENT WAIVES AND RELEASES LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL WAIVER AND RELEASE FORM.

Identifying Information Name of Claimant:............................................ Name of Customer:............................................ Job Location:................................................ Owner:....................................................... Through Date:................................................

Unconditional Waiver and Release

This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for labor and service provided, and equipment and material delivered, to the customer on this job through the Through Date of this document. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. The claimant has received the following progress payment: $......

Exceptions This document does not affect any of the following:

(1) Retentions.

(2) Extras for which the claimant has not received payment.

(3) Contract rights, including: (i) a right based on rescission, abandonment, or breach of contract; and (2) the right to recover compensation for work not compensated by the payment.

Signature Claimant's Signature:........................................ Claimant's Title:............................................ Date of Signature:...........................................

(i) If the claimant is required to execute a waiver and release in exchange for, or in order to induce payment of, a final payment and the claimant is not, in fact, paid in exchange for the waiver and release or a single payee check or joint payee check is given in exchange for the waiver and release, the waiver and release shall be null, void, and unenforceable unless it is in substantially the following form:

CONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT NOTICE: THIS DOCUMENT WAIVES THE CLAIMANT'S LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS EFFECTIVE ON RECEIPT OF PAYMENT. A PERSON SHOULD NOT RELY ON THIS DOCUMENT UNLESS SATISFIED THAT THE CLAIMANT HAS RECEIVED PAYMENT.

Identifying Information Name of Claimant:............................................ Name of Customer:............................................ Job Location:................................................ Owner:.......................................................

Conditional Waiver and Release

This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for labor and service provided, and equipment and material delivered, to the customer on this job. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. This document is effective only on the claimant's receipt of payment from the financial institution on which the following check is drawn: Maker of Check:.............................................. Amount of Check: $........................................... Check Payable to:............................................

Exceptions This document does not affect any of the following:

Disputed claims for extras in the amount of: $...........

Signature Claimant's Signature:........................................ Claimant's Title:............................................ Date of Signature:...........................................

(j) If the claimant is required to execute a waiver and release in exchange for, or in order to induce payment of, a final payment and the claimant asserts in the waiver that the claimant has, in fact, been paid the final payment, the waiver and release shall be null, void, and unenforceable unless it is in substantially the following form, with the text of the "Notice to Claimant" in at least as large a type as the largest type otherwise in the form:

UNCONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT NOTICE TO CLAIMANT: THIS DOCUMENT WAIVES AND RELEASES LIEN, STOP PAYMENT NOTICE, AND PAYMENT BOND RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID, USE A CONDITIONAL WAIVER AND RELEASE FORM.

Identifying Information Name of Claimant:............................................ Name of Customer:............................................ Job Location:................................................ Owner:.......................................................

Unconditional Waiver and Release

This document waives and releases lien, stop payment notice, and payment bond rights the claimant has for all labor and service provided, and equipment and material delivered, to the customer on this job. Rights based upon labor or service provided, or equipment or material delivered, pursuant to a written change order that has been fully executed by the parties prior to the date that this document is signed by the claimant, are waived and released by this document, unless listed as an Exception below. The claimant has been paid in full.

Exceptions This document does not affect the following:

Disputed claims for extras in the amount of: $...........

Signature Claimant's Signature:........................................ Claimant's Title:............................................ Date of Signature:...........................................