Iowa has been burning through their mechanics lien laws over the past few years. Significant changes took effect on January 1, 2013, which created a “State Construction Registry” website modernizing the filing process for mechanics lien changes in the state. The legislature quickly followed up these changes with some tiny amending details within House Bill 565, which was signed by the governor in May 2013 and took effect on July 1, 2013.
Iowa Has A Lot Of Ambitious To Continue Changing Lien Laws
After the Iowa legislature started to mumble about mechanics lien law changes, we posted an article here declaring that the “Legislature Considering Even More Amendments,” and describing many of those ambitions. Iowa pushed through some of those changes in a recent session (discussed below), but it looks like debate about the laws will continue through next session.
Take, for instance, Senator Hogg’s declaration in this video from the Senate floor, “Let me just say this, there were a number of other ideas out there this year, some of which may have merit, but none of them which have to be acted upon in 2013, so for better or worse, in 2014, it looks like we will have some other discussions about our lien laws….”
We’ll be monitoring the situation. For now, only very minor changes to the statute were passed, which are discussed below.
Legal Description Requirement Softened, But Only Maybe
The largest change to the Iowa mechanics lien laws pushed through in the recent legislative session relates to the requirement that claims and notices reference a legal description of the applicable property. The law previously required simply that a “legal description” be provided, but the new law’s text requires a “legal description adequate to describe the property.”
This is a subtle change that will likely leave courts scratching their head for meaning. Does this make the requirement easier to meet (i.e. needing only an ‘adequate’ description?) or harder (i.e. needing more than a basic legal reference like an APN?).
Unfortunately, there’s no way to tell with this. What exactly requires and constitutes a legal property description is already a pretty confusing area of law across the country and a common mechanics lien pitfall, as we’ve explored on this publication under the “Legal Property Description” tag. We’ll see how this plays out, but for now, it is safest to provide the most complete legal description you can muster when filing notices and liens.
Preliminary Notices Must Be Renewed After 2 Years, Or Go “Inactive”
The other big change to the law after this amendment is that preliminary notices must be “renewed” every two years pursuant to the new provision within Iowa Code § 572.34(12):
A preliminary notice that remains posted on the mechanics’ notice and lien registry internet website two years after the date of posting shall be declared inactive by the administrator, unless renewed. A notice of commencement of work, if there are no related active postings, shall be declared inactive two years from the date of posting, unless renewed. The administrator shall establish a process for the removal of inactive notices and for the renewal of notices pursuant to this rule.
It’s going to be interesting to see how this detail plays out. It’s not often that a preliminary notice even needs to last two years, and thus, the rule change will likely be pretty benign. However, if a project does take a long time and a preliminary notice “expires” while construction is on-going, it will be interesting to see how the courts draw up the consequences and whether a renewal is required to keep lien rights alive. We won’t know the answer to this for at least another two years.
Terminology Changes To Avoid Confusion – “Filing” Is Now “Posting”
The other significant change to the Iowa statutes is really just a cosmetic one, as the law went through and stripped all references to “filing” and substituted the word “posting.”
This change makes a lot of sense since parties are not “filing” anything, but are merely electronically posting documents to the new registry website. My guess is that the clerk and system administrators were receiving tons of documents from people trying to “file” the same, and this amendment intends to clarify the requirement. Unfortunately for Iowa, it will be very difficult to rid construction parlance of the term “filing.”