Mechanic’s Liens In Iowa

Mechanic’s liens are intended to ensure that contractors are paid for the work they perform.  They are implicated when a property owner refuses to pay a contractor for the contractor’s work.  At its most basic level, a mechanic’s lien allows the contractor to put the homeowner to a choice — pay me, or lose your property.

Mechanic’s liens in Iowa are governed by Iowa Code Chapter 572.  If a property owner refuses to pay a contractor, the contractor may place a mechanic’s lien on the subject property.  If the property owner still refuses to pay, the contractor can file a petition to foreclose on the mechanic’s lien in district court.  The judge will then decide whether the property owner owes the contractor any money and, if so, how much.  The judge can order foreclosure on the subject property and the property’s judicial sale.  The proceeds of that sale are then used to pay the contractor and, oftentimes, the contractor’s attorney fees and expenses.

Mechanic’s liens are a powerful weapon for contractors, especially in a state like Iowa that has strong homestead laws that often protect a person’s most valuable possession — their home and the land it sits on — from judgment collection.  Mechanic’s liens are not like other types of judgment liens; they are more similar to mortgage liens in that they are given a high lien priority over other liens on the property and a contractor, same as a bank, can seek the judicial sale of a person’s property if the contractor’s work goes unpaid because Iowa’s homestead exemption does not protect against mechanic’s lien judgments.  For most other types of judgment liens, that lien sits on the property and does nothing until such time as the owner tries to sell, at which point the lien may or may not mean something depending on how many and what types of other liens are on the property.

Mechanic’s liens are in addition to contractor’s other rights, most commonly a standard breach of contract claim.  The premises of the claims are the same — I did work that you promised to pay me for, you’ve refused to pay me, and now you owe me.  The difference is that a standard contract claim generally includes no right to attorney fees, litigation expenses, or immediate judicial sale of the property.  If a contractor is successful with a standard contract claim and the property owner still refuses to pay the judgment, the best the contractor can do is slap a regular lien on the property and hope to see some of the money some day, or go through all the other judgment collection processes that other people go through, like seizing and selling nonexempt property or garnishing wages.  In sum, contractors that don’t take adavantage of Iowa’s mechanic’s lien law are making things much more difficult than they need to be, which brings me to my next point . . . .

Iowa Code Chapter 672 has several procedural and filing requirements that are subject to various deadlines.  Failure to follow all necessary procedures and comply with all deadlines may reduce the contractor’s mechanic’s lien rights.  In some instances such failures can actually completely eliminate the contractor’s mechanic’s lien rights, leaving it with garden-variety breach of contract claims that will not include attorney fees and expenses or the opportunity to seek immediate forclosure and judicial sale of the property to satisfy any judgment received against the property owner for the unpaid work.  It is recommended that contractors hire a construction or contract attorney to assist with a mechanic’s lien action.

One area that can trip up a contractor in a mechanic’s lien situation is the property owner’s right to send the lienholder a written demand to commence suit.  If the contractor receives such a demand, it needs to start the music and file a petition to foreclose on the mechanic’s lien within thirty days.  Failure by the contractor to do so results in a complete forfeiture of all mechanic’s lien rights and remedies, although the contractor can still sue under the lesser contract theory discussed above.

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