Some Mechanics of Iowa Mechanic's Lien Law
Mechanic's Liens are a valuable tool used by contractors to help insure that they are fully compensated for the materials they supply and the improvements that they make to buildings or land. However, if you are a contractor providing materials or making improvements to an "owner-occupied" dwelling, essentially a residential remodeling contractor, then the mechanic's lien that you file may not be worth much more than the paper that it is printed if you neglect one crucial step.
Under Iowa's Mechanic's Lien law, Chapter 572, a contractor who enters into a contract with a home owner to provide labor or furnish materials for a owner-occupied dwelling and who has or will hire sub-contractors for the job must provide in the written contract with the home owner the following notice:
"Persons or companies furnishing labor of 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."
In the alternative a contractor who does not enter into a written contract with the home owner must, within ten (10) days of beginning work on the property, provide the owner with written notice stating the name and address of all subcontractors that the contractor intends to use for the construction and, that the subcontractors or suppliers may have lien rights if they are not compensated for the labor or material that they provided in completion of the project.
If written notice required under Chapter 572 is not provided to the owner in a timely manner then the contractor is only entitled to a lien for the work or materials that it actually performed or the materials that it actually provided and would not be entitled to a lien as it pertained to any labor performed or materials furnished by a subcontractor.
Kyle - What if the property is not owner-occupied? Scenario - rental house being re-roofed. Roofer collects material deposit from owner. Check is made out to roofer only. Roofer writes check to material supplier for materials. Supplier delivers materials. Roofer's check bounces. Supplier threatens owner with lien on property. Can they place and/or enforce a lien when they accepted a check from roofer with no credit application or credit check of him prior to delivering materials? Is there some responsibility of the supplier to verify a contractor's credit before delivering materials, or can they simply rely upon placing a lien if the check is returned? Thank you.
Thank you for the comment Ken. In its current form, the Iowa Mechanic's Lien statute gives lien rights to every person who furnishes material or performs labor on a building. The statute does not place a duty on a supplier to check a contractor's credit before delivering materials. The property owner's remedy in your scenario would be to file suit against the roofer.
Kyle, how does a homeowner appeal a mechanic's lien that was placed because the homeowner did not want to pay for shoddy work and 'milking' the contract.
Good question Pat. In general terms, to get a mechanic's lien removed under Iowa law the homeowner must make a demand on the contractor to bring suit. This demand will force the contractor to either let a court settle the matter or to relinquish his lien rights. Should you decide to go this route you should consult an attorney to make sure that the proper process is followed.