Mechanics lien laws are complex. Changes can be slow moving, and they often never come at all. Take Texas for example. The Lone Star State been looking to clean up its lien laws for a while now. Yet, despite rumblings nearly every year, nothing changes. Iowa lien laws seem to be much less stubborn.
Iowa Lien Laws Amended
Not even a year ago, Iowa lien laws were amended to require C.O.W.s (Commencement of Work notices). They’re only required of direct contractors on residential projects where subcontractors will be utilized. Essentially, these notices inform property owners that persons or companies who provide work on their project – even those parties not under direct contract – may assert mechanics lien rights if they go unpaid.
As of last Tuesday, a few more notice requirements were signed into law under House File 2233. The Master Builders of Iowa have been working to make changes like these to Iowa lien laws for nearly seven years, according to this article on the legislation.
Revising Lien Amounts
Under the new amendment to Iowa lien laws, a claimant will be able to amend their lien claim to reduce the amount of their lien with ease. Previously, section 572.26 stated that a mechanics lien could be amended “in the furtherance of justice,” but the amount demanded could not be changed. The new legislation takes a more common sense approach.
Now, Iowa mechanics lien amounts may be amended downward! Iowa still prohibits a amending a lien to increase a demand, though. It’s still good news! If a lien claim were previously filed with the incorrect amount, a claimant might have to first make sure there would be time to refile their lien claim. Then, they’d attempt to release their original lien and file a new lien with the correct amount. Further, if partial payment was made, there was no easy way to reflect that in a lien filing. Granted, increasing a lien amount is still a headache. But to reduce a lien amount, a claimant can now use that convenient Iowa Mechanics Notice and Lien Registry.
Preliminary Notice on Public Projects
On private construction projects, preliminary notice is typically required in some form or fashion. Without it, a valid lien claim cannot be made. Even where notice might not be required, we think it’s a good idea to send one. On public projects, notices are still very common, but not quite as prevalent as notice on private jobs.
Anyway, prior to House File 2233, there were no preliminary notice requirements for Iowa public projects. Some retainage claims required preliminary notice, but on the whole, notice was not necessary. Times, they are a-changin’! With the passage of HF 2233, preliminary notice will be required by parties who do not have a contract with the general contractor on public projects. If that notice is not sent to the prime contractor, a valid bond claim or retainage can’t be made.
What’s required on the notice?
The party sending notice must include their name, mailing address, phone number, and the party who hired them. The notice must be sent within 30 days of first furnishing. Further, if additional work is performed or if change orders occur throughout the life of the project, additional notice is not necessary. Finally, when it comes time to eventually make a bond claim or retainage claim, the claimant will need to support their claim by including a certified statement that the prime contractor received the notice.
We’re not shy about it – we love preliminary notices. Sure, these notices are required to preserve lien and bond rights – but on an ideal project, those won’t even come into play. The main reason to love preliminary notices is that they set the tone for a transparent project, and notices create communication lines for everyone along the payment chain. Since they foster communication and transparency, GC’s should love receiving preliminary notice. Because these notices help nip misunderstandings in the bud, the parties sending notice should be thankful, too.
Having the ability to amend a mechanics lien amount – even though the amount may only be reduced via amendment – is also helpful for Iowa mechanics lien claimants. A lot can go wrong when filing a mechanics lien, and allowing for a simplified amendment process will make life much easier.
For more on Iowa construction payment law, check out our Iowa Resources. Not in Iowa? Select your state.