Posted on 04/18/2017 at 10:29 AM by John Lande
On April 7, 2017, the governor signed significant legislation affecting contractors who may want to file a mechanics’ lien on residential construction. The law is a response to a significant decision from the Iowa Court of Appeals, previously covered by this blog, that appeared to change the law governing mechanics’ liens on residential construction.
To understand the impact of the new legislation, it is helpful to review Iowa’s mechanics’ lien law. Starting in 2013, any contractor who has a contract with a residential property owner has to file a commencement notice within 10 days of starting work to preserve the right to file a lien later. That means a contractor who is hired by a property owner to do work has to file a notice with the Iowa Secretary of State long before the contractor knows if he will need to file a lien.
The Court of Appeals’ ruling, previously covered in more detail on this blog, added a nuance to this rule. According to the Court of Appeals, the 2013 law only applied to contractors who planned to hire subcontractors during the course of the project. If a contractor planned to do all the work, according to the Court of Appeals, there was no need for a commencement notice.
The Court of Appeals ruling took many in the industry by surprise. The ruling also raised a number of questions about the rules that might govern a situation where a contractor starts work, and only partway through the job realizes he needs a subcontractor.
The Iowa Legislature appears to have agreed that the Court of Appeals’ decision created problems, because the legislature revised the mechanics’ lien statute to add the following:
Either a general contractor, or an owner-builder who has contracted or will contract with a subcontractor to provide labor or furnish material for the property, shall post a notice of commencement of work to the mechanics’ notice and lien registry internet site no later than ten days after the commencement of work on the property. A notice of commencement of work is effective only as to any labor, service, equipment, or material furnished to the property subsequent to the posting of the notice of commencement of work. . . .
The legislature made two changes: (1) adding the word “either” and (2) adding two commas. These small changes mean that any contractor who has a contract with a property owner to do work on residential construction must file a commencement notice within 10 days of starting work if he wants to preserve his right to file a mechanics’ lien.
This change makes the law clear, and easy to apply. If a contractor is going to do work on residential construction, and he has a contract with the property owner, then he needs to file a commencement notice.
As always, contractors should be aware that the mechanics’ lien law has many pitfalls, so any contractor who has questions about filing a mechanics’ lien should consult with an attorney.
The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.
- John Lande
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