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DuPage County Residential Real Estate LawyerIf you are in the process of buying or selling a home, you may be wondering what to do if you come across a mechanic's lien during your transaction. A mechanic's lien is a claim that a contractor or subcontractor has against a property for unpaid work. If you are the buyer, this can be a huge problem because it means that the property you are interested in purchasing may have a debt attached to it. If you are the seller, a mechanic's lien can also complicate things because it may reduce the amount of money you ultimately receive from the sale.

What is a Mechanic’s Lien? 

A mechanic's lien is a claim that a contractor or subcontractor has against a property for unpaid work. For example,  if you hire a contractor to build a deck and the contractor is not paid for their services, they may put a mechanic's lien on your property. This means that if you try to sell your home, the contractor can come back and claim the money they are owed out of the proceeds from the sale. Unfortunately, some homeowners find themselves facing mechanic liens even if they believe they have already paid their contractor in full. 

Addressing Mechanic’s Leins During Residential Real Estate Transactions 

If you are selling your home, but there is a mechanic’s lien on the property,  the first thing you should do is try to negotiate with the contractor who placed the lien. You may be able to come to an agreement about how the debt will be paid off so that it does not interfere with your sale. Work with an attorney who can advocate on your behalf during negotiations and provide the step-by-step guidance you need. If you are buying a home and there is a mechanic's lien on the property, you may need to work out an agreement with the seller about how the debt will be paid before you can close on the home. 

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IL real estate lawyerMost experts agree that it is a seller's market. Homes are in great demand, supply is low, and house prices are skyrocketing. If you are like many people, you may be interested in selling your home. However, selling your home is a major undertaking and it can be easy to make mistakes or overlook responsibilities. As you prepare to sell, consider the following suggestions.

Choose an Experienced Real Estate Agent

It is possible to sell your home without a realtor. However, there are many serious risks associated with "for sale by owner" transactions. Usually, these risks outweigh any potential cost savings associated with an FSBO sale. Real estate agents have access to large networks of potential buyers and ample experience with the home selling and buying process. Your agent can help you identify unqualified buyers and negotiate the best price possible.

Retain a Skilled Real Estate Lawyer

In addition to your agent, you should also consider retaining a knowledgeable real estate lawyer. Selling your home is most likely one of the largest and most consequential financial transactions you will ever make. A real estate lawyer will help you ensure all agreements and contracts are executed properly and do not contain errors or omissions. Your attorney can conduct due diligence and attend the real estate closing with you. If unexpected disputes or legal problems arise, your attorney will be there to handle it.

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IL real estate lawyerIllinois law permits contractors, construction professionals, and other parties to place a lien on a residential property for the purposes of collecting past-due payment. The Mechanics Lien Act ensures that contractors and other parties who work on a home are paid for their work. In other words, a mechanic’s lien is collateral for a debt. It is important for any homeowner to understand when a mechanic’s lien may be placed on their home and how to respond to this situation. It is especially crucial for individuals buying a home to understand how a mechanic’s lien can complicate the home-buying process.

What is a Mechanic’s Lien?

A lien is an action used to ensure the collection of a debt. Liens filed against a real estate property give the creditor interest in the property. This means that the property owner cannot sell or refinance the property until the debt is paid and the lien is lifted. The creditor may also be able to ask the court to compel the sale of the property so the creditor can receive payment from the sale proceeds.

Mechanics’ liens are used to pursue payment of construction, renovation, repair, or home improvements projects. The contractor, subcontractor, or the party who provided materials for the project may be permitted to place a lien on the property if they are not paid for labor or supplies. However, a lien must be executed properly in order to be legally enforceable. Illinois contractors have four months after a project is completed to record a mechanic’s lien.

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IL real estate lawyerThere are multiple different situations where construction may be performed on real estate property. Homeowners may plan to make improvements or renovations to their homes, or a person may plan to build a new home after a residential real estate purchase. Real estate developers may plan construction on commercial real estate property, either by making improvements to existing buildings or adding new buildings that can be leased to commercial tenants. Construction projects can be complicated, and the parties involved in these projects will need to make sure they understand their rights and obligations as they enter into construction contracts. By understanding the types of contracts that may be used in these projects, property owners, developers, and contractors can determine the best options that will protect their rights and interests.

Terms of Construction Contracts

The contracts used during construction projects will typically fall into one of the following categories:

  • Fixed-price/lump-sum contracts - A contractor may submit a bid in which a total amount will be paid for a construction project. While this may allow contractors to maximize profits if they are able to complete the project under budget, it can result in losses due to miscalculations, errors made during construction, or unexpected costs.
  • Cost-plus contracts - A property owner or developer may agree to pay for the actual costs of construction, as well as an additional amount that will allow the contractor to make a profit. These contracts allow for more flexibility if changes need to be made during a project or if unexpected expenses arise.
  • Time and materials contracts - A contractor may be paid for the materials used during a construction project, as well as an hourly rate for the time they have worked. While these contracts allow for modifications as needed, they require detailed tracking of time, and they can sometimes be inefficient.
  • Unit price contracts - A project may be divided into several phases or components, with different prices being established for different types of work. This may make it easier to make changes or additions while a project is ongoing.
  • Design-build contracts - This type of contract will combine the design of a construction project with the actual work being performed. This may be a good solution if a single contractor will be providing architectural designs and ensuring that work is completed properly.
  • Guaranteed maximum price (GMP) contracts - An owner or developer may wish to ensure that the total cost of a project will not exceed a certain price. These types of contracts may lead to increased risk for contractors, and they are typically used for projects that involve repeat work with a low possibility of delays or unexpected costs.

Contact Our DuPage County Real Estate Construction Contract Lawyers

At Stock, Carlson & Asso. LLC, we have represented in multiple types of real estate transactions and development projects. With our understanding of real estate law and contract law, we can help draft and negotiate construction contracts that will protect the rights and interests of the parties involved. Contact our Wheaton real estate attorneys at 630-665-2500 to arrange a consultation and get legal help with issues related to construction contracts.

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IL real estate lawyerBuying or selling a home is a complex financial transaction. There are a number of issues that can affect a sale, and the parties will need to make sure their interests will be protected as they proceed with the home closing process. The contingencies that will be included in a residential real estate purchase contract can play a significant role in a home sale, and it is important for buyers and sellers to understand the types of terms that may be included and how these issues will affect them.

Common Contingencies in Purchase Agreements

After a buyer makes an offer to purchase a home, and this offer is accepted by the seller, a purchase agreement will be created that will outline the details of the transaction, including the closing date and the requirements that each party will need to meet. A contract will include multiple types of contingencies, which are provisions that state that certain requirements will need to be met in order for the transaction to proceed. These terms may allow either party to terminate the transaction based on certain factors, including situations that would place them in a difficult financial position.

A purchase agreement may include contingencies that address:

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