At some point during the career of the real estate attorney, he or she, when reviewing a title insurance commitment, will have the daunting task of wading through a myriad of liens that affect the land in question. These liens, with their numerous limitation periods, are scattered throughout both the federal statutes and the Illinois Compiled Statutes. The following is a list of all the common (and not so common) liens that the real estate practitioner will encounter. The statutory citation and limitation period, if any, will be shown. Finally, any pertinent court case that affects the lien will also be noted.
Broker’s Lien (770 ILCS 15/10) This is a lien on commercial real estate. The lien attaches when the notice of lien is recorded. It expires unless a foreclosure proceeding is filed within two years of the recording of the notice.
Claim Against Estate (755 ILCS 5/18-12) This is a claim against the property of a decedent. The claim is barred two years after the decedent’s death.
Commercial Code Financing Statement (810 ILCS 5/9-403) The financing statement is a lien on fixtures. It is effective for five years from the date of recording, but it may be extended for additional five year periods by the recording of continuation statements that are recorded within six months of the expiration of the then current five year period. Note, though, that when the financing statement is recorded contemporaneously with the recorded mortgage, and thus serves as additional security for the mortgage debt, most title companies, notwithstanding the five year statute of limitations, will not waive the financing statement until the mortgage is paid off or released.
Condominium Assessment Lien (765 ILCS 605/9) The Condominium Property Act provides for the assessment of common expenses, which become a lien on the land if not paid. There is no statute of limitations.
Demolition Lien (65 ILCS 5/11-31-1 for municipalities, 55 ILCS 5/5-1080 for counties) This is a lien for the costs incurred by a municipality or county in the repair or demolition of a building. There is no statute of limitations. (There used to be a three year limitation, but that was repealed effective 1989).
Drainage Assessment (70 ILCS 605/5-17) The commissioners of a drainage district have the right to levy and collect drainage assessments. There is no statute of limitations.
Federal Estate Tax Lien (26 USCA 6324) This is a lien on the estate of a decedent. The statute of limitations is ten years from the date of death of the decedent.
Federal Tax Lien (26 USCA 6321) The federal tax lien is a lien on the property of any person who fails to pay his or her federal tax. The statute of limitations is ten years from the assessment of the tax—it was changed from six years to ten years effective 1990. Note that the recorded lien now includes a “self-releasing” feature. Once the lien becomes unenforceable, such as with a statute of limitation expiration, the lien “self-releases”—i.e., the lien automatically releases itself, without a certificate of release being recorded. Indeed, the IRS will not even record a release.
General Real Estate Tax Lien (35 ILCS 200/20-180) This is a state tax on real estate. The statute of limitations is 30 years. Most title companies, though, will insist that title to the land be in a bona fide purchaser before waiving unpaid taxes based on the statute of limitations.
Illinois Income Tax Lien (35 ILCS 5/1101) This is a state lien on the property of any person who fails to pay his or her state tax. The statute of limitations is 20 years from the date of recording of the lien. Note that the previous five year statute of limitations was extended to 20 years effective 1984.
Illinois Transfer (Inheritance) Tax Lien (35 ILCS 405/10) This is a lien upon property transferred by gift or at death for the tax due by reason of the death or gift. The statute of limitations is ten years from the date of gift or death.
Judgment Lien, including child support lien (735 ILCS 5/12-101) A judgment is a lien on the debtor’s property for seven years from the date the judgment is rendered (not from the date any memorandum of judgment is recorded). It can be revived, though, within 20 years from the date it was entered. The death of the judgment debtor can extend the limitations period by an additional year, to eight years.
Mechanics Lien (770 ILCS 60/1 et seq.) This is a lien for the labor or materials a contractor or sub-contractor furnishes to the building or improvements located on the land. Generally speaking, the statute of limitations is two years from the date the work was completed. See, though, Garbe Iron Works, Inc. v. Priester 99 Ill.2nd 84, 457 N.E.2d 422 (1983), wherein the Supreme Court held that a bankruptcy filing by a necessary party to a mechanics lien foreclosure extends the amount of time the lien claimant has to file suit to foreclose.
Mortgage (735 ILCS 5/13-116) If the mortgage has a due date on its face, then the lien expires 20 years after the due date. If there is no due date, then the mortgage expires 30 years after the date of the instrument. The title insurer will most likely require that title to the land be in a bona fide purchaser before it will waive a mortgage based on the statute of limitations. Note that a foreclosure of a mortgage must be commenced within ten years after the right to bring the action accrues. (735 ILCS 5/13-115)
Municipal Tax (65 ILCS 5/8-3-15) The corporate authorities of a municipality can enforce the collection of any tax by recording a notice of lien. There does not appear to be any statute of limitations for this lien. However, the statute does state that “a municipality creating a lien may provide that the procedures for its notice and enforcement shall be the same as that provided in the Retailers’ Occupation Tax Act….” As noted below, this lien has a 20 year statute of limitations.
Order (735 ILCS 5/2-1304) When a party to an action is required to perform any act other than the payment of money, or, to refrain from performing any act, the court may, in the order, provide that the same shall be a lien upon the real estate of the party until the order is complied with. Since this statute also states that this lien “shall have the same force and effect, and be subject to the same limitations and restrictions, as judgments for the payment of money….”, it appears that the statute of limitations would be the same as a judgment.
Property Tax Deferral Lien (320 ILCS 30/1 et seq.) This statute allows a senior citizen to defer all or a portion of his or her real estate taxes. The County Collector records a notice of this tax deferral. The deferred taxes accrue interest at 6% a year. The property cannot be “sold or transferred” until the taxes are paid. In addition, upon the death of the taxpayer, the deferred taxes and interest shall be recovered from the estate of the taxpayer within one year of the date of death.
Public Aid Lien (305 ILCS 5/3-10.2) This is a lien in favor of the State of Illinois for the repayment of monies paid under the Public Aid Code. The statute of limitations is five years from the date of recording of the lien. The lien may be extended for additional five year periods upon the recordation of a new notice of lien prior to the expiration of the then current period of enforceability.
Retailers Occupation Tax Lien (35 ILCS 120/5a ) The Department of Revenue has a lien on the real estate of any person against whom a tax is assessed. There is a 20 year statute of limitations from the date the lien was recorded.
Removal of Garbage and Debris Lien (65 ILCS 5/11-20-13) A municipality may provide for the removal of garbage and debris from private property when the owners of said property refuse to undertake such removal. The cost is a lien on the real estate. The statute of limitations is two years from the recording date of the lien.
Sanitary District Lien (70 ILCS 3010/17) Charges or rates for sanitary district services shall be a lien on the real estate for which sewerage service is supplied. There is no statute of limitations.
Sewer and Water Lien (Municipal) (65 ILCS 5/11-139-8) Charges for municipal sewer and water services shall be a lien on the real estate for which water and sewerage service is supplied. There is no statute of limitations. See also 65 ILCS 5/11-141-16.
Sidewalk Construction and Repair Lien (65 ILCS 5/11-84-1) A municipality, by ordinance, may provide for the construction and repair of sidewalks, payment for which to be by special taxation of the adjoining parcels of land. There is no statute of limitations.
Special Assessment (65 ILCS 5/9-2-65) Special assessments are levied by a municipality when it is determined that revenue is required to fund a particular service project that is intended to benefit only a specific area. At one time there was a 30 year statute of limitations for such liens. However, the Illinois Supreme Court, in G.D. Hardin, Inc. v. Village of Mount Prospect, 99 Ill.2nd 96, 457 N.E.2d 429 (1983), held that this statutory limitation was unconstitutional. Hence, there is no longer any statute of limitations. Nonetheless, it is possible that a title company, under certain circumstances, may waive old but still unpaid special assessments. See also 65 ILCS 5/9-2-70.
Unemployment Compensation Lien (820 ILCS 405/2400) The Director of the Department of Labor has a lien on the real estate of a employer from whom contributions for unemployment compensation are due. The statute of limitations is three years from the date the lien was recorded.
Weed Cutting Lien (65 ILCS 5/11-20-7 for municipalities, 60 ILCS 1/105-15 for townships) A municipality or township can provide for the cutting of weeds when the owner of real estate fails to cut them. The cost of doing so is a lien on the real estate. There is no statute of limitations.
Other statutes:
Annexation Agreement (65 ILCS 5/11-15.1-1) Annexation Agreements “shall be valid and binding for a period of not to exceed 20 years from the date of its execution.”
Effect of Recording as to Creditors and Subsequent Purchasers (765 ILCS 5/30): “All deeds, mortgages, and other instruments of writing which are authorized to be recorded, shall take effect and be in force from and after the time of filing the same for record, and not before, as to all creditors and subsequent purchasers, without notice; and all such deeds and title papers shall be adjudged void as to all such creditors and subsequent purchasers, without notice, until the same shall be filed for record.”
Lis Pendens (735 ILCS 5/2-1901)—but see Radovanov v. Land Title Company of America, Inc. 189 Ill.App.3d 433, 545 N.E.2nd 351 (1989).
Limitations-Real Actions (735 ILCS 5/13-101 et seq.)
Richard F. Bales is Chicago Title Insurance Company’s resident counsel in Wheaton. He was a drafter of the 1992 ALTA/ACSM Land Title Survey Standards. He received his Undergraduate Degree in 1973 from Illinois College and his Law Degree in 1983 from Northern Illinois University.
The author acknowledges the assistance of Dennis B. Rodgers in the research for this article.
The Law Office of Beth Mann, P.C. 