How Can Mechanic’s Liens Affect a Real Estate Transaction?

 Posted on August 14, 2026 in Real Estate

A mechanic's lien can significantly delay or even derail a real estate transaction. It gives contractors and suppliers a legal claim against a property when they haven't been paid for work or materials. This claim must generally be resolved before the property can be sold or refinanced.

If you're dealing with a mechanic's lien issue in 2026, our Lake County real estate lawyers can help you understand your options and keep your transaction on track. Attorney Stephen S. Newland has served on the Board of Directors of the Illinois Real Estate Lawyers Organization and the Real Estate Committee of the Lake County Bar Association, giving him deep insight into lien issues and how to resolve them.

What Is a Mechanic's Lien and Why Does It Exist?

A mechanic's lien is a legal claim placed against a property. A contractor, subcontractor, or supplier files it when they performed work or provided materials but weren't paid for their services. Under 770 ILCS 60/1, Illinois law gives these parties the right to file a lien against the property to secure payment for their work.

This law exists to protect contractors and suppliers who might otherwise have little recourse if a property owner refuses to pay for completed work. Unpaid contractors would have to rely solely on lawsuits against the property owner personally without this protection. This can be a much slower and less certain path to payment.

How Does a Mechanic's Lien Affect Selling Your Property?

The lien typically must be resolved before you can transfer clear title to a buyer if a mechanic's lien exists on your property. Most title companies won't issue clean title insurance with an outstanding lien on record. This means the lien needs to be paid, disputed, or otherwise resolved before closing can proceed.

This can create significant delays in a transaction. This is especially true if the lien amount is disputed or if you weren't previously aware the lien existed. Buyers are understandably hesitant to purchase a property with unresolved liens.

Can a Buyer Be Held Responsible for a Seller's Mechanic's Lien?

A mechanic's lien is a claim against an interest in the property. Therefore, an unresolved lien can create problems for a buyer who purchases the property. But buying property with a mechanic's lien does not generally make the buyer personally responsible for the seller's unpaid bill. Instead, a valid lien may remain enforceable against the property or the buyer's interest in it. It depends on whether the lien claimant followed Illinois law.

This is one reason a title search is important before closing. Title insurance may also protect against certain covered title problems. However, coverage depends on the terms and exceptions in the policy. A known mechanic's lien may be excluded from coverage unless it is resolved or the title insurer agrees to insure over it.

What Options Exist for Resolving a Mechanic's Lien?

Several approaches can help resolve a mechanic's lien and allow a transaction to move forward. Common options include:

• Paying the disputed amount to clear the lien before closing
• Negotiating a reduced settlement with the contractor or supplier
• Placing disputed funds in escrow while the underlying issue is resolved separately
• Challenging the validity of the lien if it was improperly filed or filed after the statutory deadline
• Obtaining a lien waiver from the contractor once payment has been made or the dispute resolved

The right approach often depends on the specific circumstances. This includes whether the debt is legitimately owed and how much time remains before the scheduled closing.

Can a Mechanic's Lien Be Challenged as Invalid?

A mechanic's lien may be challenged if the contractor failed to follow the requirements of Illinois law. This can include failing to meet an applicable filing or notice deadline or failing to include required information in the lien claim.

There are several deadlines under the Illinois Mechanics Lien Act. For example, a contractor generally must record the lien or bring an enforcement action within four months after completing the work to preserve the lien against purchasers and certain other third parties. A lawsuit to enforce the lien generally must be brought within two years after completion of the contract or additional work.

Successfully challenging an invalid lien can allow a transaction to proceed without the seller having to pay the disputed claim. However, resolving the issue can take time and may require court involvement.

Schedule a Free Consultation With Our Waukegan, IL Real Estate Attorney

Our attorneys are local to Illinois and put their clients and communities first. We bring many decades of combined experience to real estate transactions throughout Lake County. So, we understand how stressful an unexpected lien can feel during what should be an exciting time. We’ll work diligently to resolve these issues so your transaction can move forward smoothly.

Contact Newland & Newland, LLP at 847-549-0000 to talk to our Lake County real estate lawyers today.