Iowa Considers Bill to Modify Mechanic's Lien Law

Iowa Considers Bill to Modify Mechanic's Lien Law

  

Joshua C. Dickinson

   

The Iowa legislature is considering the passage of HSB 173/ SSB 1215.    It would revise Iowa Code Chapter 572, Mechanic's Lien Law, to require contractors and material providers to give public notice of their rights in order to perfect a mechanic's lien.  Notice will be posted on a State Construction Registry. 

The bill would also expand the right to recover attorney fees to any prevailing plaintiff and allows any prevailing defendant to recover attorney fees, not just those defending claims involving owner-occupied properties.  Commercial construction would be exempt from the central registry requirement. 

The bill has been assigned to subcommittee in House and Senate Judiciary Committees and will carry over to the 2010 session.

 

 

 

 

Joshua C. Dickinson, Esq.
Spencer Fane Britt & Browne LLP
9420 Underwood Ave., Suite 200
Omaha, Nebraska 68114
(402) 965-8600

(402) 547-5519 (DD)
(402) 965-8601 (facsimile)

1000 Walnut, Suite 1400
Kansas City, MO 64106
(816) 474-8100

jdickinson@spencerfane.com

www.spencerfane.com

www.noncompetelawyers.com

 

 

Report on a mechanic's lien case in Missouri

One of folks here in Missouri recently mailed me this report:

" Not sure if you are aware of this or not, but we worked for a contractor that provided lien waivers to the owner of multiple properties saying he had paid us and a lot of other suppliers.  We were not paid.  In the end we filed liens on all the property and the owners had to pay us again.  I prevailed on one irate property owner to go to the County DA and file criminal charges for lien fraud.  I was a witness in the case.  We won.  The individual who committed lien fraud was sentenced to 5 years in the state pen.  I have been able to use this case against others that have done this by demonstrating what will happen to them and low and behold when they find out they might go to jail they find the money to pay us.

 To the best of my knowledge this was the first case in Missouri that resulted in jail time for lien fraud."

New Kansas mechanic's lien ruling causes more concern

The Kansas Court of Appeals has again upheld the long standing tradition of being very inflexible with mechanic's liens. The Court in Buchanan v. Overley, 2008 WL 612255 ruled that the failure to verify the lien claimants address renders the mechanic's lien invalid even though the correct address was reflected numerous times on attachments to the mechanic's lien. Looks like the Kansas Attorney Full Employment Act is in full bloom!

New Missouri case allows contractor to file a mechanic's lien in one case and a separate contract\tort case separately

The common wisdom in Missouri is to bring all possible actions by a contractor in one suit. In George Weis Co., v. Stratum Design-Build, Inc. 227 S.W. 3d 486 (Mo. en banc 2007) the Missouri Supreme Court allow two separate lawsuits! Here the rationale seems to turn up the fact that the contractor did not have a mechanic's lien and therefore it did not have to join the other mechanic lien holders in a separate case. Wonder how this reconciles with Mo. Rev. Stat. Sec. 429.300?

New Kansas Mechanic's lien case

A new case in Kansas (In re a Mechanic's Lien Against the City of Kansas City, Kansas) entered March 23, 2007 seems to stand for the proposition that a mechanic's lien does not attach to property where a lessee merely tells an owner about a potential improvements to real property. So...a tenant telling a landlord that your are making improvements does not put the mechanic's lien claimant in a position to have an valid lien.

I suspect we will have to wait to see if this gets appealed.

Mechanic's lien deadlines

The Missouri Court of Appeals ruled that the work to correct labor and material performed in something other than a "workman like manner" extends the deadline for the filing of a mechanic's lien. I note a dissent on this and perhaps this case will not stand but does it make sense to extend the deadline simply to cure the work performed by the contractor? Or did the Court take this approach as a way to possibly "caress" the parties into resolving their issues? See United Petroleum Services, Inc., Appellant v. Thomas Piatchek, Respondent.

Mechanic's lient and financial institutions

The Wisconsin decision of Hoida, Inc. V. M&I Midstate Bank (717 N.W. 2d 17 2006) reveals that a bank does NOT have a duty to check for any mechanic liens to see if monies should have been paid to the subcontractor instead of the general contractor. This is based upon the interpretation of the Wisconsin mechanic's lien law which gives lenders a priority over mechanic lien claimants. Having said that....this case is from Wisconsin and M&I Bank's headquarters is based in ....... Wisconsin! This seems to overlook a general duty of care that might be imposed upon banks in the other 49 states of our country!

Virginia mechanic's lien

More on yesterday's decision regarding the anti-indemnity provision. In examining Virginia law on mechanic's lien the provision did not seek to entirely insulate the engineer but only to limit damages. This anti-indemnity provision would only related to a provision that would seek to totally avoid all liability.

It appears courts will permit limitations on liability where the limitation is reasonable in comparison to the contract lien, it looks like the standard used in Kansas is also adopted in Virginia...namely that mechanic's liens in Virginia are strictly construed. (See a different result in Missouri). The failure to certify contemporaneously with the filing of a memorandum of lien that the line was mailed to the owner was a fatal flaw!

Kansas Mechanic's Lien

In a recent decision the Kansas Supreme Court ruled the failure to properly recite the correct legal name of the general contractor was determined to be a fatal to the enforceability of a mechanics’ lien.  The confusion was between the name of Merit General Contractors, Inc., the name of the filed mechanic’s lien and the correct name of the general contractor which was Merit General Constructors, Inc.

Now tell me this type of distinction should cause the complete invalidation of the mechanics lien? Well, in Kansas it will!!!

Mechanic's Lien in Kansas

A new case in Kansas that should be read by everyone...courtesy of Doug Weems of SFBB! Court of Appeals of Kansas.

TRADESMEN INTERNATIONAL, INC., Appellee/Cross-appellant,
v.
WAL-MART REAL ESTATE BUSINESS TRUST; Wal-Mart Stores, Inc.; Merit General
Contractors, Inc.; and Centennial Insurance Company, Appellants/Cross-
Appellees,
and
Construction Services Corp. and Derstler Lumber Co., Inc., Defendants.
No. 93,410.
March 3, 2006.

Syllabus by the Court
1. K.S.A. 60-1105(b) authorizes amendment of a mechanic's lien statement by leave of the court and in the furtherance of justice as long as the lien amount is not increased. Nevertheless, the trial court may not allow amendment of a vitally defective mechanic's lien statement after the statutory period for filing a valid mechanic's lien has expired.

2. Mechanics' liens are statutory and can only be created in the manner set forth in the statutes. Parties claiming a mechanic's lien have the burden of bringing themselves within the statute.

3. Although the mechanics' lien statutory provisions are liberally construed once a lien attaches, the requirements for a lien to come into existence must be strictly met.

4. K.S.A. 60-1103(a)(1) requires that a mechanic's lien statement filed by a subcontractor state the name of the contractor.

5. There is no privity of contract between a subcontractor and a property owner, and a subcontractor can obtain a lien only by complying with the statutory provisions.

6. A mechanic's lien statement filed by a subcontractor which fails to state the name of the contractor is fatally defective.

7. Under the facts of this case, the mechanic's lien statement filed by the subcontractor was vitally defective because it failed to name the correct contractor. Because no mechanic's lien was created by the vitally defective lien statement, the plaintiff should not have been allowed to amend the lien statement to name the proper contractor after the statutory period for filing a mechanic's lien statement had expired.

8. In this case, the plaintiff was a proper claimant under the payment bond, which extended coverage to all persons or entities as supp

Doug Weems
Spencer Fane Britt & Browne, LLP
1000 Walnut, Suite 1400
Kansas City, MO 64106
(816) 292-8264
(816) 474-3216 (facsimile)
dweems@spencerfane.com
www.spencerfane.com

What does this mean? The case states what is known...if the mechanic's lien is defective, no amendment will be allowed after the statutory filing period has expired.