Will Landowners have to carry a Lien on their Property During Construction?

The Montcalm Wind easement legally requires the project to keep property free of all liens. (Section 3 of the lease reads “Construction Liens. Grantee shall keep the Property free and clear of all liens and claims of lien for labor and services resulting from its Operations thereon”). The landowners at Montcalm Wind will not have to carry liens on their property during construction, even if liens were to be filed during construction.

Recognizing that subcontractors use liens to help them navigate disputes during construction processes, Apex projects have built in safeguards to ensure that any lien placed on a project during construction is promptly. Here’s how it works: When an Apex project contracts with a lead contractor to construct a wind facility, the contract generally requires the contractor to deliver its work free of all liens. If a lien is placed on the project, the contractor is contractually required to discharge the lien. There are several ways this can happen:

  • The lead contractor on the project can pay the vendors what the vendors believe they are owed to immediately release the lien;
  • The lead contractor can post a bond to remove the lien while a dispute process proceeds. In their contracts with Apex Clean Energy, contractors commit to placing a bond to remove any outstanding lien promptly after a lien has been filed, usually within about 5 business days;
  • Apex Clean Energy can pay the vendor directly with funds they have secured from the contractor to release the lien immediately; or
  • Apex Clean Energy can call upon its bonding entity to pay the vendors and remove the lien.

So where does this concern come from? In 2014, during construction of Apex's Hoopeston Wind project in Illinois, there was a cost dispute between the project’s contractor and a subcontractor. As required by their contract with Apex, the contractor posted a bond to cover the disputed costs, as is standard practice. At that time, however, Illinois had a very unusual law that allowed liens to remain in place even after bonds had been posted. In fact, Illinois was the last state in the country to enact a lien bond statute. That law was finally changed in 2016, and now, Illinois law requires that when a contractor posts an eligible bond, that action automatically triggers the court to issue an order discharging any liens and prevent future liens from being attached for the same claim.

The bottom line? Landowners who participate in the Montcalm Wind project can feel confident that disputes between contractors that may emerge during construction will not adversely affect them, their credit, or their property.