On April 30, 2021, the Governor of Iowa officially signed House File 561 into law — amending certain sections of the Iowa mechanics lien laws.
These changes specifically deal with the current difficulties regarding filing claims on properties that span multiple counties, and also expanded the ability to recover attorney fees in foreclosure actions when a lien has been discharged by a bond.
Iowa mechanics lien amendment signed into law
Introduced back in February of this year, this bill traveled through the Iowa legislature unanimously. And just two short months later, the bill was signed into law by the Iowa Governor. One of the original drafters of this bill, Jodie Clark McDougal (Chair of Dentons Davis Brown Construction Department in Iowa), said she was “very excited and proud to see this bill pass.”
Let’s break down how these new changes could affect you.
- Title: HF561 – A bill for an act relating to the perfection of mechanics’ liens and mechanics’ liens remedies and including effective date provisions (formerly HSB173)
- Signed: 04/30/2021 by Governor Kim Reynolds
- Effective Date: 01/01/2022
Liens on properties spanning multiple counties
The first major change under this new legislation will make amendments to the current provisions under Iowa Code §572.8(3). A large issue that many contractors have faced in Iowa is the lien filing process on properties that cover more than one county.
Under the present system, a lien needs to be filed in duplicate on the Iowa Mechanic’s Notice & Lien Registry for each county the property is located in, which resulted in increased expenses not only for the contractor filing the claim, but for property owners as well looking to bond off the claims.
This will no longer be an issue under these new changes, and the statute will be read as follows, (underlined language represents the additions):
“A lien perfected under this section shall be limited to the county or counties in which the building, land, or improvement to be charged with the lien is situated. The county or counties identified on the mechanics’ notice and lien registry internet site at the time of posting the required notcies pursuant to sections 572.13A and 572.13B shall be the only county or counties in which the building, land, or improvement may be charged with a mechanic’s lien.”
Attorney fees award for bonded off liens
The other major change that will take place in 2022 touches on the potential award of attorney fees in relation to lien foreclosure actions.
Currently, reasonable attorney fees may be awarded in an action to enforce a mechanics lien. However, statutes are strictly construed, and the language left a noticeable gap in foreclosure actions when the lien was discharged by a bond (i.e. bonded off). This has now been remedied under these new changes. Iowa Code §572.32 will be amended as follows:
- In a court action to enforce a mechanic’s lien, or an action brought upon a bond given in lieu thereof, a prevailing party may be awarded reasonable attorney fees.
- In a court action to challenge a mechanic’s lien posted on a residential property, or any bond given in lieu thereof, if the person challenging the lien or defending against any action on the bond prevails, the court may award reasonable attorney fees and actual damages.
This is just another step Iowa has taken recently expanding the contractors’ ability to recover attorney fees. In June of 2020, an amendment was passed to allow the recovery of attorney fees in a lien foreclosure action against a homestead property.
Thoughts from an Iowa attorney
“HF561 passed the Iowa House and Senate unanimously and was signed into law by the Governor on April 30. It provides two primary amendments to Iowa’s mechanic’s lien statute. First, it allows a lien to apply to multiple counties if the building, land or improvement subject to the lien is located in multiple counties. This provides greater protection to contractors filing a lien on a property that straddles a county line, rather than limiting the lien to only one county.
Second, the amendment now allows the prevailing ‘party,’ rather than just the prevailing ‘plaintiff,’ to recover its attorney’s fees, thereby protecting contractors from the costs of defending valid liens, which is especially important where the cost to enforce one’s lien is greater than the amount of the lien itself. These are minor amendments to the statute that will have a big positive effect on contractors who file mechanic’s liens in Iowa.”