On January 1, 2013, significant changes to Iowa mechanics lien law went into effect. (The PAID blog discussed these changes just a few days after their effective date.) Amazingly, the legislature isn’t quite done yet: Two House Bills (House File 258 and House Study Bill 215) and a Senate Bill (Senate File 360) are making their way through the Iowa legislature and could bring even more change to mechanics lien law in that state.
New Notice Requirements
A significant change to Iowa mechanics lien law would be to the state’s notice requirements:
- When filing preliminary notice of a lien, lien claimants must not only list the property on which they are filing a lien but may also have to “accurately describe” that property in the notice as well. Preliminary notices posted to the state’s website will remain valid for two years unless it is renewed.
- All parties, whether working as a subcontractor under a general contractor or as a contractor directly under the property owner, must file a notice of commencement on the state’s website.
- When sending notice of commencement, required under Iowa law in order to file a valid mechanics lien, the contractor or subcontractor must also provide the “parcel identification number” assigned to each property for tax purposes. Like the preliminary notice timeframe, notices of commencement posted to the website will only remain valid for two years.
- Furthermore, this notice of commencement must be sent to the address listed in Iowa’s new lien registry and must also “accurately describe” the property.
New Mechanics Lien Requirements
In addition to mandating new notice requirements, the amendments to Iowa mechanics lien law would also substantially affect how lien claimants post liens and notify the public that those liens have been fully or partially satisfied
- All lien claims will be posted on the state’s lien website and properly indexed by its administrators but no longer would need to be endorsed by the state’s administrator upon posting. If the law goes into effect, posts to the website may only be sent to the administrator electronically, not by fax or mail.
- More significantly, merely posting to the website would replace the old requirement that the mechanics lien had to be filed in the county recorder’s office in which the real estate is located.
- Once paid, the lien claimant must post notice that the lien has been satisfied or else the claimant will forfeit any money it received and be forced to pay a $25 penalty. In a new section of the law, lien claimants must also post when their liens have been partially satisfied as well or else face forfeiture and money penalties.
Will the Legislature Approve the Proposed Amendments?
The House Judiciary committee passed the amendments by a unanimous 20-0 vote on March 7, 2013. A Senate version of the same bill passed committee on the same day. A closer look at the lobbying history of the proposed amendments reveals that the bills are heavily supported by contracting and homebuilders firms in Iowa. In other words, the bills have strong support in the Iowa legislature and could go into effect as soon as July 15, 2013.
The move toward a greater emphasis on the state’s online lien registry is one that many subcontractors and general contractors may not be prepared for. Furthermore, the new requirement that not only full satisfaction of a mechanics lien but also partial satisfaction must be published would impose much tighter requirements on lien claimants who don’t want to forfeit any money they received.
While the proposed changes would create even more duties for lien claimants, electronic filing may actually make getting paid easier.
Nevertheless, Iowa mechanics lien law is paving the way for other states to make the move toward electronic filing and other modern reforms. While the proposed changes would create even more duties for lien claimants, the ability to do the entire process electronically may, in the end, actually make posting a lien easier in Iowa.