Mechanics liens are a powerful tool to enforce payment. As such, each state’s lien laws are finely tailored, and the statutes they reside in can be complex beasts. In a statute that takes up pages and pages of text, even the most seemingly insignificant details can affect how courts interpret what’s required under the law. This has become abundantly clear with some recently passed Iowa legislation. A difference of ten letters and two commas has changed what’s required of residential contractors. These changes will go into effect July 1, 2017.
Iowa Notice Requirements for Residential Contractors
Most states refer to a notice at the outset of work as a Notice of Commencement. We can’t say for sure whether Iowa refers to such a notice as a C.O.W. (Commencement of Work notice) as a nod to their agricultural industry, but as a pun enthusiast, I sure hope that’s the case. But I digress…
Currently, Iowa law requires that only those general contractors on residential projects who utilize the work of subcontractors provide a C.O.W. These notices let owners know that those persons or companies who provide labor or materials on the residential project may assert lien rights if they go unpaid. The C.O.W. must be provided to the property owner in at least 10 point bolded font and must also be posted to Iowa’s online registry. It must read:
“Persons or companies furnishing labor or materials for the improvement of real property may enforce a lien upon the improved property if they are not paid for their contributions, even if the parties have no direct contractual relationship with the owner. The state construction registry provides a listing of all persons or companies furnishing labor or materials who have posted a lien or who may post a lien upon the improved property.”
Under Iowa House File 586, which was signed last month by Governor Terry Branstad, a C.O.W. must now be filed by every residential contractor, not just those contractors with subcontractors or suppliers. So for residential projects, every party who has a direct contract with the owner must provide a C.O.W. and post it to the online registry. Other than that, all other Iowa notice requirements, which can be found in our Notice of Commencement Handbook or in our Iowa Preliminary Notice FAQs, remain the same.
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Takeaway
Understandably, this legislation will not be embraced warmly by Iowa general contractors. In a system that already hinges on complicated deadlines and formal requirements, adding more Iowa notice requirements means that there are more opportunities for an Iowa contractor to miss out on lien rights. Residential contractors in The Hawkeye State had better be sure to send their C.O.W.s. If they don’t, their lien rights will be at steak.
For all things Iowa, head over to our Iowa Construction Payment Resources or the Iowa tag on the blog.
