You've found the perfect house, your offer has been accepted, and you're moving toward closing when you discover there's a mechanics lien on the property from work done by the previous owner. Should you walk away from the deal?

The short answer is: it depends. A mechanics lien isn't necessarily a deal breaker, but it is a serious issue that must be properly addressed before you can obtain clear title to the property.

Why You Need an Attorney for Chicagoland Home Purchases

If you're buying a home in Illinois, you should have an experienced real estate attorney representing you—and this is exactly why. Unlike some states where buyers rely solely on real estate agents and title companies, Illinois strongly encourages attorney representation for good reason.

Your attorney should be conducting their own title review and identifying potential issues like mechanics liens before you're surprised at closing. A good real estate attorney will:

• Review title early in the process
• Identify any existing liens or encumbrances
• Ensure the purchase contract requires the seller to deliver clear title
• Negotiate who bears responsibility for resolving any title issues

Understanding How Liens Follow Property

A mechanics lien attaches to the real property itself, not just to the person who hired the contractor. This means that a properly recorded lien can follow the property to new owners. Under Illinois law, if a lien was recorded within four months of completion of the work, it's generally valid against subsequent purchasers—including you.

Your Options as a Buyer

Option 1: Require the Seller to Clear the Lien (Recommended)

This is often the cleanest solution and should be your attorney's first approach. The seller pays off the lien amount and obtains a release, giving you clear title at closing. A properly drafted purchase contract should already require the seller to deliver clear title, meaning this becomes the seller's responsibility, not a negotiation point.

Option 2: Bond Over the Lien

If the lien amount is disputed or the seller lacks funds to pay it off, the lien can be "bonded over." This involves purchasing a surety bond that replaces the property as security for the claim. The sale can proceed while the underlying dispute is resolved in court.

Option 3: Escrow the Disputed Amount

Sometimes the safest approach is to escrow enough money to cover the lien amount plus potential interest and costs, allowing the closing to proceed while the dispute is resolved.

What Your Attorney and Title Company Should Do

Your Attorney Should:

• Ensure your purchase contract requires the seller to deliver clear title free of liens
• Identify any mechanics liens and demand their resolution by the seller
• Negotiate appropriate contract terms to protect you from undisclosed encumbrances
• Coordinate with the title company to ensure all issues are resolved

The Title Company Should:

• Perform a comprehensive title search
• Verify whether any lien was properly recorded within statutory deadlines
• Determine if liens affect the property you're purchasing
• Require resolution before issuing a clear title policy
• Work with your attorney to ensure proper clearance documentation

Red Flags to Watch For

Walk away from the deal (or demand significant protections) if:

• Multiple recent liens appear on the title
• The seller refuses to resolve liens or claims they're "not their problem"
• The seller seems evasive about the nature or validity of liens
• The lien amount appears grossly inflated (possible fraud)
• Your attorney cannot negotiate adequate contract protections

Your Rights Against the Seller

If you proceed with the purchase and later discover that the seller failed to disclose a valid lien, you may have several avenues for recourse:

• Breach of contract claims depending on the terms of your purchase agreement and any seller disclosures provided
• Title insurance protection: In most Illinois transactions, the seller purchases an owner's title insurance policy for the buyer at closing. This policy should cover mechanics liens that were properly recorded but not disclosed in the title commitment, providing you with both coverage for the lien amount and legal defense
• Warranty deed protections if the seller provided general warranty deed covenants

Your attorney can help you determine which remedies are available and most effective in your specific situation.

The Bottom Line

A mechanics lien on your potential new home isn't automatically a reason to abandon your purchase, but it requires proper legal representation to navigate safely. The key is having an experienced real estate attorney who identifies these issues early and ensures they're resolved at the seller's expense, not yours.

Don't let excitement about the property rush you into accepting inadequate solutions or assuming responsibility for the seller's title problems.

CTM Legal Group provides comprehensive real estate representation for Chicagoland home buyers. We conduct thorough title reviews and ensure you're protected from liens and other title issues. Contact us early in your home buying process—before problems become your problems.

Legal Disclaimer

This blog post is for informational purposes only and does not constitute legal advice. Do not rely on this information for legal decisions. CTM Legal Group is not your attorney unless we have a signed, written retainer agreement in place. For specific legal advice regarding your situation, please consult with a qualified attorney.