2017 Construction Law Seminar

Transcription

1 2017 Construction Law Seminar Mechanic's Liens in Iowa Under the New Rules 2:20 p.m. - 3:05 p.m. Presented by Brian Rickert Brown Winick 666 Grand Avenue, Suite 2000 Des Moines, IA Phone: rickert@brownwinick.com Friday, April 7, 2017

2 Mechanic's Liens in Iowa ISBA Construction Law Seminar Brian Rickert BrownWinick 666 Grand Avenue, Suite 2000 Des Moines, IA Telephone: Facsimile:

3 Background on Speaker Brian Rickert is a partner at BrownWinick and is Chairman of the firm s Construction Law Practice Group. Mr. Rickert s practice focuses on construction law and litigation, and representation of businesses. For a number of years, Mr. Rickert has been listed in Best Lawyers in America for Construction Law, Great Plains SuperLawyers for Construction Law, and in Chambers USA for commercial litigation. In August 2015, Mr. Rickert was named Best Lawyers 2016 Des Moines Construction Law Lawyer of the Year. Mr. Rickert received his law degree, with Honors, from Drake University Law School and holds a Bachelor of Business Administration Degree in Finance from the University of Iowa. He has presented many seminars and lectures to professionals, construction associations and attorneys on topics relating to construction law and litigation. He is a member of the Polk County and Iowa State Bar Associations; the ABA s Forum on the Construction Industry; the ABA s Construction Litigation Committee; Master Builders of Iowa; Homebuilders Association of Iowa and Greater Des Moines; the Associated General Contractors of Iowa; and others. Mr. Rickert is a founding member of the Construction Law Section of the Iowa State Bar Association. Mr. Rickert is licensed to practice law in Iowa, Kansas, and Missouri.

4 Mechanic s Liens Purpose of Liens is to provide a method where a contractor can recover the value of his goods and services provided Statutory Remedy must follow the statute exactly Lien Laws Vary By State Iowa Code Chapter 572

5 Changes to Chapter 572 New Rules Passed in 2012 HF 675 & HF New Rules are effective and apply to material furnished or labor performed after January 1, New rules Generally apply to residential construction, not commercial construction Residential Construction means construction on singlefamily or two-family dwellings occupied or used, or intended to be occupied or used, primarily for residential purposes, and includes real property pursuant to chapter 499B. Iowa Code Chapter 499B is called the Horizontal Property Act and applies to apartments and condominiums.

6 What Were the Major Changes? New Definitions New Ways to Perfect Liens New Notice Requirements New Ways to File - Mechanics Notice and Lien Registry

7 Mechanics Notice and Lien Registry (the Database ) New Rules focus on the Database Centralized on-line database managed by Secretary of State s Office All notices and liens are posted to the Database. No more filings in District Court. Database is at:

8 The Database continued All parties must utilize the Database Notices must be posted to Database All Liens must be posted to Database Cannot post Liens unless you have posted the required notices Failure to follow rules defeats your lien rights

9 First New Notice: Owner-Notice Notice from General Contractor to Owner of Residential Property Starting on January 1, 2013, a general contractor who uses subcontractors on a residential property must provide the following Owner-Notice in boldface ten point (or larger) font: Persons or companies furnishing labor or 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. The mechanics notice and lien registry provides a listing of all persons or companies furnishing labor or materials who have posted a lien or who may post a lien upon the improved property. Notice provided to Owner, not posted on Database Notice must include internet website address and toll-free telephone number of the Database. Statute does not specify how this notice must be provided i.e., by mail, included in original contract, etc. Failure to provide this notice forfeits your lien rights.

10 Second New Notice: Notice of Commencement of Work Notice of Commencement of Work on Residential Properties Must be posted on the Database within ten days of commencement of work on the property. Filed by General Contractor or Owner-Builder. Must contain: (a) the name and address of the owner, (b) the name, address, and telephone number of the general contractor or owner-builder, (c) the address of the property or a description of the location of the property if the property cannot be reasonably identified by an address, (d) the legal description that adequately describes the property to be charged with the lien, (e) the date work commenced, (f) the tax parcel identification number, (g) the county in which the building, land, or improvement to be charged with the lien is situated, (h) the e- mail address of the person posting or submitting the notice of commencement of work or the address of another individual or entity designated to receive electronic correspondence on behalf of this person, and (i) any other information prescribed by the administrator pursuant to rule. This Notice must also be sent to the owner s address as posted to the Database, and if owner s address is different than the property address, then you must also mail it to that property address. A G.G s who fails to provide this Notice is not entitled to file a lien. Notices do not need to be sent to Owner-Builders. Subcontractor can file the notice for the General Contractor or Owner-Builder if they do not file it

11 Automatic Notice from SOS to Owner Commencement of Work Owner-Notice from SOS to Owner of Residential Property Once a Notice of Commencement of Work is posted, the SOS assigns the project a mechanics notice and lien registry number. SOS also mails the owner a copy of the owner notice required, which shall state: Persons or companies furnishing labor or 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. The mechanics notice and lien registry internet site provides a listing of all persons or companies furnishing labor or materials who have posted a lien or who may post a lien upon the improved property. If the person or company has posted its notice or lien to the mechanics notice and lien registry internet site, you may be required to pay the person or company even if you have paid the general contractor the full amount due. Therefore, check the mechanics notice and lien registry internet site for information about the property including persons or companies furnishing labor or materials before paying your general contractor. In addition, when making payment to your general contractor, it is important to obtain lien waivers from your general contractor and from persons or companies registered as furnishing labor or materials to your property. The information in the mechanics notice and lien registry is posted on the internet site of the mechanics notice and lien registry. This notice shall contain the Database s website and toll-free telephone number.

12 Third New Notice: Preliminary Notice From Sub Preliminary Notice Requirement for Subcontractors on Residential Properties Sub must post this Preliminary Notice on registry. Preliminary notice will not be posted until after the Notice of Commencement of Work is posted. Sub can post Notice of Commencement of Work if G.C./Owner-Builder failed to do so. No set time period, but must post Preliminary Notice before the balance due is paid to the general contractor or owner-builder. Lien is enforceable to the extent of the balance due at time of posting of notice. Preliminary notice must include: (1) name of the owner; (2) MNLR number; (3) name, address, and telephone number of the subcontractor furnishing labor, service, equipment, or material; (4) name and address of the person who contracted with the claimant for the furnishing of the labor, service, equipment, or material; (5) name of the general contractor or owner-builder under which the claimant is performing or will perform the work; (6) address of the property or a description of the location of the property if the property cannot be reasonably identified by an address; (7) legal description that adequately describes the property to be charged with the lien; (8) date the material or materials were first furnished or the labor was first performed; (9) tax parcel identification number, (10) the county in which the building, land, or improvement to be charged with the lien is situated, (11) the address of the subcontractor or the address of another individual or entity designated to receive electronic correspondence on behalf of the subcontractor, and (12) any other information required by the administrator. At the time a preliminary notice is posted, the SOS shall mail a written owner notice to the owner s address. An owner-builder shall not receive an owner notice. SOS will also post a proof of service on the registry. In an action to enforce its lien, sub must prove by a preponderance of the evidence that the owner received the required notice. Sub can do this by separately providing the notice to the owner by one of the following: (1) certified mail with return receipt; (2) personal service in the manner original notices are required to be served; and (3) actual notice with a signed receipt from the owner acknowledging notice. A sub who fails to file this Notice shall not be entitled to a lien.

13 Posting a Mechanics Lien Claimant must post a verified statement of account of the demand due the person, after allowing all credits Statement of Account must be verified and include: (a) the date when such material was first furnished or labor first performed, and the date on which the last of the material was furnished or the last of the labor was performed; (b) the legal description of the property to be charged with the lien, (c) the name and last-known mailing address of the owner of the property, (d) the address of the property or a description of the location of the property if the property cannot be reasonably identified by an address, and (e) the tax parcel identification number. Lien is limited to the county in which the building, land or improvement to be charged with the lien is situated. The county identified on the Database at the time of posting shall be the only county in which the building, land or improvement may be charged with a mechanic s lien.

14 Additional Requirements to Post Liens on Commercial Property Any person posting a lien on commercial property must register as a user on the Database Person must provide a verified Statement of Account as noted above, and the following additional information: (a) the name and mailing address of the owner, (b) the name, address and telephone number of the general contractor or owner-builder, (c) the county in which the building, land or improvement to be charged with the lien is situated, (d) the address of the person posting or submitting the mechanic s lien or the address of another individual or entity designated to receive electronic correspondence on behalf of the person posting the lien.

15 What Happens After Lien is Posted? SOS mails a copy of the lien to the Owner s address. The owner notice shall include the Database website address and toll-free telephone number. All documents posted are immediately accessible to the general public. Liens posted must contain: (a) the name of the person by whom posted, (b) the date and hour of posting, (c) the amount thereof, (d) the name of the person against whom the lien is posted, (e) the legal description of the property to be charged, (f) the tax parcel identification number of the property to be charged, and (g) the address of the property or a description of the location of the property if the property cannot be reasonably identified by an address. The Database is searchable. Access to the public is free.

16 Priority of Liens Priority is determined by time of posting liens to state construction registry Registry puts a date and time on the lien when it is posted (liens are indexed) Construction mortgage liens are still preferred to mechanic s liens if the work was commenced after the date of the recording of the construction mortgage lien even if the lien was posted within ninety (90) days.

17 How to Use the Database Must set up an account with SOS office Information needed to set up an account: (a) address, (b) name, (c) business name, (d) mailing address, (e) telephone number, and (f) security password. SOS charges fees and bills your account Database remembers your information for fill-in-the-blank forms

18 What Must a General Contractor/Owner-Builder Do? Provide Owner-Notice to Owner Post Notice of Commencement of Work Post Lien within 90 days of last work on the job

19 What Must a Sub/Supplier Do? Search Database to see if Notice of Commencement was posted. Post Notice of Commencement of Work if not posted by G.C./Owner-Builder Post Preliminary Notice Post Lien within 90 days of last work on the job

20 What Must a Second Tier Sub/Supplier Do? Send One-Time notice to G.C./Owner-Builder containing the name, mailing address and telephone number of the person furnishing labor or materials, and the name of the subcontractor to whom the labor or materials were furnished, within thirty days of first furnishing labor or materials for which a lien claim may be made. Search Database to see if Notice of Commencement was posted. Post Notice of Commencement of Work if not posted by G.C./Owner-Builder Post Lien within 90 days of last work on the job

21 How Do the New Rules Apply to Commercial Construction? Most changes in new legislation apply to residential only. However, some apply to commercial construction. Must post liens on commercial construction projects to the Database. Notices of Commencement of Work are not required. Preliminary notices from subs and the administrator are not required. One-time notice for second-tier subs and suppliers is still required containing the name, mailing address and telephone number of the person furnishing labor or materials, and the name of the subcontractor to whom the labor or materials were furnished, within thirty days of first furnishing labor or materials for which a lien claim may be made.

22 Summary of New Process Residential GC/Owner-Builder provides written notice to owner Residential General Contractor/Owner- Builder posts Notice of Commencement Residential Subs post Preliminary Notice to registry Liens posted later, if payment is not provided

23 Questions? Questions and Answers Feel free to contact me afterwards Thank you!

24 Website: Toll Free Phone Number: OFFICE LOCATIONS: 666 Grand Avenue, Suite 2000 Des Moines, Iowa Telephone: (515) Facsimile: (515) Franklin Place Pella, Iowa Telephone: (641) Facsimile: (641) DISCLAIMER: No oral or written statement made by BrownWinick attorneys should be interpreted by the recipient as suggesting a need to obtain legal counsel from BrownWinick or any other firm, nor as suggesting a need to take legal action. Donot attempt to solve individual problems upon the basis of general information provided by any BrownWinick attorney, as slight changes in fact situations may cause a material change in legal result.

25 Mechanic's Liens in Iowa ISBA Construction Law Seminar Brian Rickert BrownWinick 666 Grand Avenue, Suite 2000 Des Moines, IA Telephone: Facsimile: Background on Speaker Brian Rickert is a partner at BrownWinick and is Chairman of the firm s Construction Law Practice Group. Mr. Rickert s practice focuses on construction law and litigation, and representation of businesses. For a number of years, Mr. Rickert has been listed in Best Lawyers in America for Construction Law, Great Plains SuperLawyers for Construction Law, and in Chambers USA for commercial litigation. In August 2015, Mr. Rickert was named Best Lawyers 2016 Des Moines Construction Law Lawyer of the Year. Mr. Rickert received his law degree, with Honors, from Drake University Law School and holds a Bachelor of Business Administration Degree in Finance from the University of Iowa. He has presented many seminars and lectures to professionals, construction associations and attorneys on topics relating to construction law and litigation. He is a member of the Polk County and Iowa State Bar Associations; the ABA s Forum on the Construction Industry; the ABA s Construction Litigation Committee; Master Builders of Iowa; Homebuilders Association of Iowa and Greater Des Moines; the Associated General Contractors of Iowa; and others. Mr. Rickert is a founding member of the Construction Law Section of the Iowa State Bar Association. Mr. Rickert is licensed to practice law in Iowa, Kansas, and Missouri. Mechanic s Liens Purpose of Liens is to provide a method where a contractor can recover the value of his goods and services provided Statutory Remedy must follow the statute exactly Lien Laws Vary By State Iowa Code Chapter 572 1

26 Changes to Chapter 572 New Rules Passed in 2012 HF 675 & HF New Rules are effective and apply to material furnished or labor performed after January 1, New rules Generally apply to residential construction, not commercial construction Residential Construction means construction on singlefamily or two-family dwellings occupied or used, or intended to be occupied or used, primarily for residential purposes, and includes real property pursuant to chapter 499B. Iowa Code Chapter 499B is called the Horizontal Property Act and applies to apartments and condominiums. What Were the Major Changes? New Definitions New Ways to Perfect Liens New Notice Requirements New Ways to File - Mechanics Notice and Lien Registry Mechanics Notice and Lien Registry (the Database ) New Rules focus on the Database Centralized on-line database managed by Secretary of State s Office All notices and liens are posted to the Database. No more filings in District Court. Database is at: 2

27 The Database continued All parties must utilize the Database Notices must be posted to Database All Liens must be posted to Database Cannot post Liens unless you have posted the required notices Failure to follow rules defeats your lien rights First New Notice: Owner-Notice Notice from General Contractor to Owner of Residential Property Starting on January 1, 2013, a general contractor who uses subcontractors on a residential property must provide the following Owner-Notice in boldface ten point (or larger) font: Persons or companies furnishing labor or 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. The mechanics notice and lien registry provides a listing of all persons or companies furnishing labor or materials who have posted a lien or who may post a lien upon the improved property. Notice provided to Owner, not posted on Database Notice must include internet website address and toll-free telephone number of the Database. Statute does not specify how this notice must be provided i.e., by mail, included in original contract, etc. Failure to provide this notice forfeits your lien rights. Second New Notice: Notice of Commencement of Work Notice of Commencement of Work on Residential Properties Must be posted on the Database within ten days of commencement of work on the property. Filed by General Contractor or Owner-Builder. Must contain: (a) the name and address of the owner, (b) the name, address, and telephone number of the general contractor or owner-builder, (c) the address of the property or a description of the location of the property if the property cannot be reasonably identified by an address, (d) the legal description that adequately describes the property to be charged with the lien, (e) the date work commenced, (f) the tax parcel identification number, (g) the county in which the building, land, or improvement to be charged with the lien is situated, (h) the e- mail address of the person posting or submitting the notice of commencement of work or the address of another individual or entity designated to receive electronic correspondence on behalf of this person, and (i) any other information prescribed by the administrator pursuant to rule. This Notice must also be sent to the owner s address as posted to the Database, and if owner s address is different than the property address, then you must also mail it to that property address. A G.G s who fails to provide this Notice is not entitled to file a lien. Notices do not need to be sent to Owner-Builders. Subcontractor can file the notice for the General Contractor or Owner-Builder if they do not file it 3

28 Automatic Notice from SOS to Owner Commencement of Work Owner-Notice from SOS to Owner of Residential Property Once a Notice of Commencement of Work is posted, the SOS assigns the project a mechanics notice and lien registry number. SOS also mails the owner a copy of the owner notice required, which shall state: Persons or companies furnishing labor or 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. The mechanics notice and lien registry internet site provides a listing of all persons or companies furnishing labor or materials who have posted a lien or who may post a lien upon the improved property. If the person or company has posted its notice or lien to the mechanics notice and lien registry internet site, you may be required to pay the person or company even if you have paid the general contractor the full amount due. Therefore, check the mechanics notice and lien registry internet site for information about the property including persons or companies furnishing labor or materials before paying your general contractor. In addition, when making payment to your general contractor, it is important to obtain lien waivers from your general contractor and from persons or companies registered as furnishing labor or materials to your property. The information in the mechanics notice and lien registry is posted on the internet site of the mechanics notice and lien registry. This notice shall contain the Database s website and toll-free telephone number. Third New Notice: Preliminary Notice From Sub Preliminary Notice Requirement for Subcontractors on Residential Properties Sub must post this Preliminary Notice on registry. Preliminary notice will not be posted until after the Notice of Commencement of Work is posted. Sub can post Notice of Commencement of Work if G.C./Owner-Builder failed to do so. No set time period, but must post Preliminary Notice before the balance due is paid to the general contractor or owner-builder. Lien is enforceable to the extent of the balance due at time of posting of notice. Preliminary notice must include: (1) name of the owner; (2) MNLR number; (3) name, address, and telephone number of the subcontractor furnishing labor, service, equipment, or material; (4) name and address of the person who contracted with the claimant for the furnishing of the labor, service, equipment, or material; (5) name of the general contractor or owner-builder under which the claimant is performing or will perform the work; (6) address of the property or a description of the location of the property if the property cannot be reasonably identified by an address; (7) legal description that adequately describes the property to be charged with the lien; (8) date the material or materials were first furnished or the labor was first performed; (9) tax parcel identification number, (10) the county in which the building, land, or improvement to be charged with the lien is situated, (11) the address of the subcontractor or the address of another individual or entity designated to receive electronic correspondence on behalf of the subcontractor, and (12) any other information required by the administrator. At the time a preliminary notice is posted, the SOS shall mail a written owner notice to the owner s address. An owner-builder shall not receive an owner notice. SOS will also post a proof of service on the registry. In an action to enforce its lien, sub must prove by a preponderance of the evidence that the owner received the required notice. Sub can do this by separately providing the notice to the owner by one of the following: (1) certified mail with return receipt; (2) personal service in the manner original notices are required to be served; and (3) actual notice with a signed receipt from the owner acknowledging notice. A sub who fails to file this Notice shall not be entitled to a lien. Posting a Mechanics Lien Claimant must post a verified statement of account of the demand due the person, after allowing all credits Statement of Account must be verified and include: (a) the date when such material was first furnished or labor first performed, and the date on which the last of the material was furnished or the last of the labor was performed; (b) the legal description of the property to be charged with the lien, (c) the name and last-known mailing address of the owner of the property, (d) the address of the property or a description of the location of the property if the property cannot be reasonably identified by an address, and (e) the tax parcel identification number. Lien is limited to the county in which the building, land or improvement to be charged with the lien is situated. The county identified on the Database at the time of posting shall be the only county in which the building, land or improvement may be charged with a mechanic s lien. 4

29 Additional Requirements to Post Liens on Commercial Property Any person posting a lien on commercial property must register as a user on the Database Person must provide a verified Statement of Account as noted above, and the following additional information: (a) the name and mailing address of the owner, (b) the name, address and telephone number of the general contractor or owner-builder, (c) the county in which the building, land or improvement to be charged with the lien is situated, (d) the address of the person posting or submitting the mechanic s lien or the address of another individual or entity designated to receive electronic correspondence on behalf of the person posting the lien. What Happens After Lien is Posted? SOS mails a copy of the lien to the Owner s address. The owner notice shall include the Database website address and toll-free telephone number. All documents posted are immediately accessible to the general public. Liens posted must contain: (a) the name of the person by whom posted, (b) the date and hour of posting, (c) the amount thereof, (d) the name of the person against whom the lien is posted, (e) the legal description of the property to be charged, (f) the tax parcel identification number of the property to be charged, and (g) the address of the property or a description of the location of the property if the property cannot be reasonably identified by an address. The Database is searchable. Access to the public is free. Priority of Liens Priority is determined by time of posting liens to state construction registry Registry puts a date and time on the lien when it is posted (liens are indexed) Construction mortgage liens are still preferred to mechanic s liens if the work was commenced after the date of the recording of the construction mortgage lien even if the lien was posted within ninety (90) days. 5

30 How to Use the Database Must set up an account with SOS office Information needed to set up an account: (a) address, (b) name, (c) business name, (d) mailing address, (e) telephone number, and (f) security password. SOS charges fees and bills your account Database remembers your information for fill-in-the-blank forms What Must a General Contractor/Owner-Builder Do? Provide Owner-Notice to Owner Post Notice of Commencement of Work Post Lien within 90 days of last work on the job What Must a Sub/Supplier Do? Search Database to see if Notice of Commencement was posted. Post Notice of Commencement of Work if not posted by G.C./Owner-Builder Post Preliminary Notice Post Lien within 90 days of last work on the job 6

31 What Must a Second Tier Sub/Supplier Do? Send One-Time notice to G.C./Owner-Builder containing the name, mailing address and telephone number of the person furnishing labor or materials, and the name of the subcontractor to whom the labor or materials were furnished, within thirty days of first furnishing labor or materials for which a lien claim may be made. Search Database to see if Notice of Commencement was posted. Post Notice of Commencement of Work if not posted by G.C./Owner-Builder Post Lien within 90 days of last work on the job How Do the New Rules Apply to Commercial Construction? Most changes in new legislation apply to residential only. However, some apply to commercial construction. Must post liens on commercial construction projects to the Database. Notices of Commencement of Work are not required. Preliminary notices from subs and the administrator are not required. One-time notice for second-tier subs and suppliers is still required containing the name, mailing address and telephone number of the person furnishing labor or materials, and the name of the subcontractor to whom the labor or materials were furnished, within thirty days of first furnishing labor or materials for which a lien claim may be made. Summary of New Process Residential GC/Owner-Builder provides written notice to owner Residential General Contractor/Owner- Builder posts Notice of Commencement Residential Subs post Preliminary Notice to registry Liens posted later, if payment is not provided 7

32 Questions? Questions and Answers Feel free to contact me afterwards Thank you! Website: Toll Free Phone Number: OFFICE LOCATIONS: 666 Grand Avenue, Suite 2000 Des Moines, Iowa Telephone: (515) Facsimile: (515) Franklin Place Pella, Iowa Telephone: (641) Facsimile: (641) DISCLAIMER: No oral or written statement made by BrownWinick attorneys should be interpreted by the recipient as suggesting a need to obtain legal counsel from BrownWinick or any other firm, nor as suggesting a need to take legal action. Do not attempt to solve individual problems upon the basis of general information provided by any BrownWinick attorney, as slight changes in fact situations may cause a material change in legal result. 8