No Eminent Domain for Bike Trails

Most people are generally familiar with the legal concept of eminent domain, whereby the government can take private property for public use, upon the payment of just compensation to the property owner.  It is found in the Fifth Amendment to the U.S. Constitution, and similarly found in the Iowa Constitution at Article 1, Section 18.  The Iowa Legislature has provided that the power of eminent domain to be enjoyed by state agencies and local governing bodies shall be as delegated by legislative act.  In the Iowa Supreme Court case of East Oaks Development, Inc. v. Iowa Department of Transportation ("DOT"), 603 N.W.2d 566, (Iowa 1999), the Court determined that the Legislature has not extended this power of eminent domain for development of recreational trials, stating: "...the DOT has no general eminent domain authority for establishing recreational trails or bikeways."  Ultimately, the Court determined that the DOT could exercise eminent domain to re-develop a road by placing a bike trail next to it, since such placement of the trail helped improve traffic on the road.  The takeaway from the East Oaks case, however, is that the State does not have eminent domain power for the creation of recreational trails.

Foreign Investors Available for Iowa Projects

The Iowa Economic Development Authority (IEDA) has announced that it has contracted with a company called CMB to handle investment opportunities by foreign investors for Iowa projects. A government program known as EB-5 allows foreign investors to invest in an American project and immigrate to the U.S. as long as certain criteria are met.  This program was initially used in Iowa for dairy operations, but is now being expanded to construction, energy, and infrastructure projects.

CMB got its start in the redevelopment of closed military bases, hence where "CMB" comes from.  CMB handles all of the investor-side issues: screening the investors, tracking and verifying investor funds, and preparing all of the paperwork to conform to the EB-5 program.  CMB also will review the Iowa project to make sure that it is viable and that it is a project suitable for the EB-5 program.  

A foreign investor must invest at least $1,000,000 ($500,000 in areas of high unemployment or rural areas) and the project must create or save 10 jobs for the project to qualify.  This program will not fund 100% of a project, so additional capital is required, making this available really only for multi-million dollar projects.

During an informational meeting yesterday, CMB urged anyone interested in this program with a suitable Iowa project to contact them early in the process, ideally before or during site selection, as the site location could make or break whether the project qualifies.  If you have a project you think would benefit from this program, contact me for more information.

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Transferring Property From an LLC

Although Corporations and Limited Liability Companies offer their owners similar protections from liability, differences between the two entities can be found.  For instance, when transferring property from an LLC, the Iowa Revised Uniform Limited Liability Act requires that the record (i.e deed) must disclose whether the LLC is member-managed or manager-managed; whether the conveyance is in the ordinary course of the LLC's business or affairs; and that the signer has authority to act on behalf of the LLC.  Whereas, the record does not need show these additional disclosures for property transferred by a corporation. 

Consideration must be given to subtle differences such as these when deciding on a choice entity for a new venture.

Iowa Fence Law Before Legislature

I'll admit that the Iowa Fence Law (359A) has become a side project of mine.  I have blogged about it on two separate occasions in the past, first noting that as written and determined by the Iowa Supreme Court, the law applied to both urban and rural property.  The update noted that the mechanisms in the law to handle disputes are outdated.

The Iowa Senate is reviewing a bill to address the first issue.  Senate File 2102 seeks to modify the fence law to only require an adjoining landowner with livestock (or who has owned livestock in the last five years) to help pay for the neighbors' fence. 

However, the problematic dispute resolution mechanism still exists.  Power to resolve problems under this code section are still within the purview of a group called "fence viewers," who are essentially township trustees.  In areas where township trustees no longer exist, it is unclear how disputes are resolved.

The Legislature should completely abandon 359A as currently written and start from scratch.  The piecemeal amendments to the fence law that have occurred over the last century make it completely impractical. 

Iowa Supreme Court sides with Purchase Money Mortgage

Today the Iowa Supreme Court released its opinion in Freedom Financial Bank v. Estate of Edward Boesen and Maureen Boesen.  Sullivan & Ward, P.C. represented Freedom Financial Bank in a mortgage foreclosure action against the Estate of Edward Boesen.  The Court affirmed the decision of the Polk County District Court and the Iowa Court of Appeals, ruling that Freedom Financial's purchase money mortgage was superior to a wife's dower interest in intestate property

The Court also conducted an extensive analysis of the Iowa Probate Code to determine whether the Estate or Maureen Boesen should receive the remainder of the proceeds from the sale of the subject real estate. 

Stay tuned to the Iowa Law Blog for an analysis of the Court's probate ruling and its effect.

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.