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Lien Waiver Recommended on Public Project with Payment Bond?

IowaLien Waivers

Should a public project Owner require lien waivers from GCs and major subs and suppliers if the project has a payment bond? Specifically talking about a project in Iowa. It doesn't appear that lien waivers are common around here on public projects. Thanks, Ryan

2 replies

Dec 17, 2020

In Iowa, there is no specific statutory provision controlling lien waivers. Lien waivers are examined to give effect to the intention of the parties, as determined by the language of the document, the sequence of events, and surrounding circumstances; any doubt is resolved in favor of the lien claimant. 

Iowa does not provide a specific statutory form or template that must be used in order for a lien waiver to be valid, so construction participants are free to use whatever kind of lien waiver form they want. Since the form lien waivers must take is not regulated in Iowa, it can be easy for Iowa lien waiver language to include clauses that overreach, or work to waive more than the signer may have intended.

Many states explicitly don’t allow parties to waive lien rights before they begin work on a project. Iowa, however, does not have a specific prohibition on advance lien waivers, and no Iowa court has expressly prohibited advance lien waivers. In Iowa, lien waivers are examined to give effect to the intention of the parties.

Because of this, it is a best practice to make sure that every contract is examined to make sure that it doesn’t contain a “no-lien” clause that could impair the ability to get paid for the work performed. And to take a good look at the language of all lien waivers to make sure they only waive what is intended.

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Dec 18, 2020
Mechanic’s liens aren’t allowed on public properties in Iowa. If the amount of the job exceeded $25,000, there should have been a performance bond or cash equivalent posted by the contractor. A subcontractor or supplier who hasn’t been paid files a sworn statement with the public entity seeking payment from the performance bond. Let me know if I can help further. michael.dee@brownwinick.com
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