Last year, Scott mentioned pending legislation in Iowa, that if passed, would drastically alter the construction lien landscape in that state. Well, the effective date for that legislation has come, and the Iowa construction lien process has indeed changed. Effective January 1, 2013, Iowa has implemented a centralized electronic filing system, similar to Utah’s, for the filing of notices and mechanic’s liens. There are also other substantive changes to the Iowa mechanic’s law scheme. We’ll take a brief look at the new law below.
Entitlement to Iowa lien rights expanded
The first change to Iowa mechanic’s lien law regards who is entitled to lien protection. The new law differentiates between general contractors and owner-builders and now holds that both are entitled to mechanic’s lien protection – provided that an owner-builder is not entitled to lien for improvements made prior to transferring title to a buyer.
State Construction Registry Website
Perhaps the most drastic change to the lien scheme in Iowa is that the perfection of the lien is now accomplished by filing the lien in a centralized and mandatory state construction registry website, rather than by filing the lien with the clerk of court for the county in which the project was located. Further, additional details are required to be included in the lien claim itself – although, most lien claimants were including this information previously [address of the property in question or a description of its location and the tax parcel identification number].
A unique aspect of Iowa law, in which a mechanic’s lien may be filed after the 90-day statutory period provided they serve the property owner with notice of the claim (only effective against funds that the property owner has not yet paid to the general contractor) is retained. The lien claimant must post the lien to the state construction registry internet website, and providing written notice thereof to the owner.
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General contractor notice requirements
Notice requirements have also changed. A general contractor on a residential project is now required to give a Preliminary Notice to Owner stating that the subcontractors may enforce a lien upon the improved property if they are not paid, even if they have no direct contractual relationship with the owner. The notice shall also provide information relating to the availability of information posted on the state construction registry established by the bill. A general contractor who fails to provide such notice to the owner is not entitled to a mechanic’s lien and remedies pursuant to Code chapter 572.
Further notice is also required. A general contractor or owner-builder who has contracted or will contract with a subcontractor to provide labor or furnish material for the property is now required to post a notice of commencement of work, including certain specific information, to the state construction registry internet website. This notice is required to be filed within 10 days of work beginning. Additionally, the general contractor no longer is required to send the owner a complete list of subcontractors.
Subcontractor notice requirements
A subcontractor on a residential project is required to post a preliminary notice to the state construction registry website including certain statutorily required language. The notice is mandatory, and if posted before the balance due is paid to the general contractor or the owner-builder, it is effective as to all labor, service, equipment, and material furnished to the property by the subcontractor
Attorney’s fees expanded
Under the new Iowa law, any prevailing plaintiff may recover attorney’s fees in a successful action enforcing a mechanic’s lien. This means that subcontractors and suppliers are now able to recover attorney fees in a successful action, instead of only parties with a direct contractual relation with the owner of the property as it was previously.
Commercial project notice requirements remain unchanged
No additional notice requirements are now required for commercial projects.
So, there you have it. New notice requirements for all parties performing work on a residential project, and a new perfection/filing mechanism for all mechanic’s liens.