Illinois Contractor Sworn Statements and Double-Payment Liability Under Section 5

Pursuant to Illinois law, it is the duty of both the contractor and the owner to ensure a sworn statement is provided before any payment is made. Section 5(a) of the Illinois Mechanics Lien Act, 770 ILCS 60/5(a), states:

It shall be the duty of the contractor to give the owner, and the duty of the owner to require of the contractor, before the owner or his agent... shall pay or cause to be paid to the contractor or to his order any moneys or other consideration due or to become due to the contractor, or make or cause to be made to the contractor any advancement of any moneys or any other consideration, a statement in writing, under oath or verified by affidavit, of the names and addresses of all parties furnishing labor, services, material, fixtures, apparatus or machinery, forms or form work and of the amounts due or to become due to each.

If you are an owner, developer, or general contractor on an Illinois construction project, you have almost certainly received a sworn statement from your contractor. You may have filed it away without a second thought. That instinct could cost you.

Under Section 5 of the Illinois Mechanics Lien Act (770 ILCS 60/5), an owner who pays a general contractor without first requiring a sworn statement, and without verifying that subcontractors and suppliers have been paid, can be held liable to those unpaid parties even after paying the GC in full. In plain terms: you can pay twice for the same work.

What Is a Contractor's Sworn Statement?

A contractor's sworn statement is a notarized document that the contractor provides to the owner in connection with a request for payment. It must identify every subcontractor and direct supplier on the project, the subcontract amounts including any approved extras, what has been paid to date, and what is currently due to each party. The requirement is codified at Section 5(a) of the Mechanics Lien Act, 770 ILCS 60/5(a). On owner-occupied single-family residential projects, the statute goes a step further, it requires the original contractor to give the homeowner written notice, in ten-point boldface type, of the owner's right to demand a sworn statement before releasing any payment. 770 ILCS 60/5(b)(i), 60/5(b)(iii).

The purpose is straightforward: it gives the owner a real-time picture of who is owed money down the payment chain so that the owner can protect itself, and those parties, by withholding sufficient funds to cover outstanding balances.

Where Owners Go Wrong

The most common mistake is treating the sworn statement as a formality. An owner receives it, the GC signs it, and the check goes out. But Section 5 imposes a duty, not just a right. If you pay the GC without demanding a sworn statement, or if you pay amounts that the sworn statement shows are still owed to subcontractors, you are exposed.

Worse, an owner who never bothers to request a sworn statement at all may be found to have waived the statutory protection entirely. Illinois appellate courts have held that the failure to demand a sworn statement can constitute a waiver of the owner's right to one, leaving the owner with no defense when unpaid subcontractors come knocking. The takeaway is clear: the statute gives owners a powerful shield, but only if they actually pick it up and use it.

The second common mistake involves taking the sworn statement at face value. If a GC submits a sworn statement falsely certifying that all subcontractors have been paid, and the owner pays relying on that certification, the owner may have a claim against the GC for fraud, but that does not necessarily extinguish the unpaid subcontractor's lien rights against the property. The subcontractor's lien is a right against the property, not merely against the GC, and it can survive a fraudulent sworn statement.

What GCs Need to Understand

For general contractors, the sworn statement is a legal document, not a billing formality. Submitting a false or inaccurate sworn statement, even negligently, can expose the GC to claims from the owner, from unpaid subcontractors, and potentially to criminal liability for submitting a false sworn statement under oath.

GCs should also understand that the owner's right to withhold payment based on the sworn statement is not a breach of contract. An owner who withholds amounts sufficient to cover listed subcontractor balances is doing exactly what the statute contemplates.

An Inaccurate Sworn Statement Can Destroy the Contractor's Own Lien

There is a flip side that general contractors ignore at their peril. When an owner requests a sworn statement, the contractor is obligated to provide one that is accurate and satisfies every technical requirement of Section 5. Illinois courts have held that a contractor who delivers a deficient sworn statement, even one the owner knows is wrong, forfeits the contractor's own lien rights on the project.

The Illinois Appellate Court addressed this directly in Pyramid Development, LLC v. Dukane Precast, Inc., 2014 IL App (2d) 131131. In that case, the owner did the right thing and demanded sworn statements from the general contractor throughout the project. The contractor supplied them, but the statements contained material inaccuracies. The court found that the contractor's failure to deliver sworn statements that were accurate and fully compliant with Section 5 was fatal to the contractor's mechanic lien claim, even though the owner was aware of the errors and arguably could have caught them. The court read the statute's plain language to mean that an owner waives the sworn-statement requirement only by not requesting one in the first place. Once the owner asks, the burden shifts entirely to the contractor to get it right.

The practical lesson is significant. A GC who submits a sloppy or incomplete sworn statement is not just creating a billing dispute, the GC may be handing the owner a complete defense to a future lien claim. For owners, the case reinforces why demanding a sworn statement before every payment is not optional. It is the single most effective step an owner can take to limit exposure on both sides of the ledger.

Why the 90-Day Notice Matters More Than You Think

For subcontractors and suppliers who do not have a direct contract with the property owner, there is another layer of protection, and risk, built into the Illinois Mechanics Lien Act. Section 24 (770 ILCS 60/24) requires these parties to serve written notice on the property owner within 90 days of their last date of furnishing labor or materials. This notice informs the owner that the subcontractor or supplier has provided work on the project and has not been paid.

The 90-day notice is not a formality. A subcontractor's lien is generally limited to the amount the owner still owes the general contractor at the time the Section 24 notice is received. If the owner has already paid the GC in full before the notice arrives, the subcontractor's lien may be worth nothing, even if the GC owes the subcontractor tens of thousands of dollars. Serving the notice early, even at the start of the project, locks in a higher available lien amount and is one of the most effective steps a subcontractor can take to protect its payment rights.

Where the 90-day notice intersects with sworn statements is where things get particularly dangerous. A general contractor controls what appears on the sworn statement. If the GC omits a subcontractor or understates what is owed, the owner may never know the subcontractor exists, and the owner will pay accordingly. The 90-day notice is the subcontractor's independent tool to put the owner on notice regardless of what the GC's sworn statement says.

Three Illinois court decisions illustrate exactly how this plays out in practice.

Weather-Tite, Inc. v. University of St. Francis

In the first instance, the general contractor provided a sworn statement that accurately listed the subcontractor and the unpaid balance. The owner, however, failed to withhold that amount and paid the contractor in full. When the subcontractor went unpaid and filed a mechanic lien, the court enforced the lien for the full unpaid amount shown on the sworn statement. The owner had the information it needed to protect itself and chose not to act on it.

Doors Acquisition, LLC v. Rockford Structures Construction Co.

In another case, the contractor's sworn statement did not list the subcontractor as having any unpaid balance. The subcontractor never served a 90-day notice, and the owner paid the contractor in full. When the subcontractor later attempted to enforce a lien claim, the court denied it. Because no Section 24 notice had been provided before payment was made, the owner was entitled to rely on the sworn statement as delivered. The subcontractor's failure to independently notify the owner proved fatal to its lien rights.

Knickerbocker Ice Co. v. Halsey Bros. Co.

In a third case, the contractor provided a sworn statement but listed the subcontractor's unpaid balance as less than what was actually owed. The owner properly withheld that lesser amount and paid the contractor the difference. When the subcontractor filed a lien for the full amount it was owed, the court limited the lien to the amount that had appeared on the sworn statement, not the true balance. Without an independent 90-day notice correcting the record, the subcontractor was bound by the GC's understatement.

The lesson across all three cases is the same: subcontractors who rely solely on the general contractor's sworn statement to protect their interests are taking an enormous risk. The Section 24 notice is the one tool that puts the owner on direct notice of the subcontractor's claim, independent of anything the GC says or fails to say. Missing the 90-day window to serve it is one of the most common, and most costly, mistakes in Illinois construction payment disputes.

Practical Takeaways

Owners and lenders should require a sworn statement before every draw, not just at final payment. They should review it carefully, compare it against prior draw requests, and consider joint checks or conditional lien waivers from major subcontractors before releasing funds.

General contractors should treat the sworn statement as a compliance document and ensure it is accurate as of the date it is submitted. Discrepancies between the sworn statement and actual payment status are the most reliable indicator that a double-payment dispute is on the horizon.

If you are an owner, lender, or GC navigating a sworn statement dispute or facing an unexpected mechanic lien on a project where you believed all parties were paid, contact Emalfarb Law LLC. We have represented parties on both sides of the payment chain in Illinois construction payment disputes for decades.