Senate
File
2236
-
Introduced
SENATE
FILE
2236
BY
COMMITTEE
ON
JUDICIARY
(SUCCESSOR
TO
SSB
3039)
A
BILL
FOR
An
Act
relating
to
mechanics’
liens,
public
construction
liens,
1
and
the
early
release
of
retained
funds.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
TLSB
5704SV
(2)
87
asf/jh
S.F.
2236
Section
1.
Section
26.3,
subsection
3,
Code
2018,
is
amended
1
to
read
as
follows:
2
3.
Sections
26.4
through
26.13
26.12
apply
to
all
3
competitive
bidding
pursuant
to
this
section
.
4
Sec.
2.
Section
314.1,
subsection
2,
Code
2018,
is
amended
5
to
read
as
follows:
6
2.
Notwithstanding
any
other
provision
of
law
to
the
7
contrary,
a
public
improvement
that
involves
the
construction,
8
reconstruction,
or
improvement
of
a
highway,
bridge,
or
culvert
9
and
that
has
a
cost
in
excess
of
the
applicable
threshold
10
in
section
73A.18
,
262.34
,
297.7
,
309.40
,
310.14
,
or
313.10
,
11
as
modified
by
the
bid
threshold
subcommittee
pursuant
to
12
section
314.1B
,
shall
be
advertised
and
let
for
bid,
except
13
such
public
improvements
that
involve
emergency
work
pursuant
14
to
section
309.40A
,
313.10
,
or
384.103,
subsection
2
.
For
a
15
city
having
a
population
of
fifty
thousand
or
less,
a
public
16
improvement
that
involves
the
construction,
reconstruction,
or
17
improvement
of
a
highway,
bridge,
or
culvert
that
has
a
cost
18
in
excess
of
twenty-five
thousand
dollars,
as
modified
by
the
19
bid
threshold
subcommittee
pursuant
to
section
314.1B
,
shall
be
20
advertised
and
let
for
bid,
excluding
emergency
work.
However,
21
a
public
improvement
that
has
an
estimated
total
cost
to
a
22
city
in
excess
of
a
threshold
of
fifty
thousand
dollars,
as
23
modified
by
the
bid
threshold
subcommittee
pursuant
to
section
24
314.1B
,
and
that
involves
the
construction,
reconstruction,
or
25
improvement
of
a
highway,
bridge,
or
culvert
that
is
under
the
26
jurisdiction
of
a
city
with
a
population
of
more
than
fifty
27
thousand,
shall
be
advertised
and
let
for
bid.
Cities
required
28
to
competitively
bid
highway,
bridge,
or
culvert
work
shall
29
do
so
in
compliance
with
the
contract
letting
procedures
of
30
sections
26.3
through
26.13
26.12
.
31
Sec.
3.
Section
572.26,
Code
2018,
is
amended
to
read
as
32
follows:
33
572.26
Kinds
of
action
——
amendment.
34
1.
An
action
to
enforce
a
mechanic’s
lien
shall
be
by
35
-1-
LSB
5704SV
(2)
87
asf/jh
1/
7
S.F.
2236
equitable
proceedings,
and
no
other
cause
of
action
shall
be
1
joined
therewith.
2
2.
a.
Any
lien
statement
may
be
amended
by
leave
of
court
3
in
furtherance
of
justice,
except
as
to
the
amount
demanded
4
Except
as
provided
in
paragraph
“b”
,
a
claimant
may
only
amend
a
5
lien
statement
by
leave
of
court
in
furtherance
of
justice
.
6
b.
A
lien
statement
may
be
amended
without
leave
of
court
7
to
decrease
the
amount
demanded,
and
such
amendment
shall
be
8
effected
through
the
mechanics’
notice
and
lien
registry.
9
Amendment
of
a
lien
statement
pursuant
to
this
subparagraph
10
shall
not
change
or
otherwise
affect
its
priority.
11
c.
A
lien
statement
shall
not
be
amended
to
increase
the
12
amount
demanded.
13
Sec.
4.
Section
573.15,
Code
2018,
is
amended
by
striking
14
the
section
and
inserting
in
lieu
thereof
the
following:
15
573.15
Exception.
16
A
person,
firm,
or
corporation
that
has
performed
labor
17
for
or
furnished
materials,
service,
or
transportation
to
18
a
subcontractor
shall
not
be
entitled
to
a
claim
against
19
the
retainage
or
bond
under
this
chapter
unless
the
person,
20
firm,
or
corporation
that
performed
the
labor
or
furnished
21
the
materials,
service,
or
transportation
does
all
of
the
22
following:
23
1.
Notifies
the
principal
contractor
in
writing
with
a
24
one-time
notice
containing
the
name,
mailing
address,
and
25
telephone
number
of
the
person,
firm,
or
corporation
that
26
performed
the
labor
or
furnished
the
materials,
service,
27
or
transportation,
and
the
name
of
the
subcontractor
for
28
whom
the
labor
was
performed
or
the
materials,
service,
or
29
transportation
were
furnished,
within
thirty
days
of
first
30
performing
the
labor
or
furnishing
the
materials,
service,
or
31
transportation
for
which
a
claim
may
be
made.
Additional
labor
32
performed
or
materials,
service,
or
transportation
furnished
by
33
the
same
person,
firm,
or
corporation
to
the
same
subcontractor
34
for
use
in
the
same
construction
project
shall
be
covered
by
35
-2-
LSB
5704SV
(2)
87
asf/jh
2/
7
S.F.
2236
this
notice.
1
2.
Supports
the
claim
with
a
certified
statement
that
2
the
principal
contractor
received
the
notice
described
in
3
subsection
1.
4
Sec.
5.
NEW
SECTION
.
573.28
Early
release
of
retained
5
funds.
6
1.
For
purposes
of
this
section:
7
a.
“Authorized
contract
representative”
means
the
person
8
chosen
by
the
governmental
entity
or
the
department
to
9
represent
its
interests
or
the
person
designated
in
the
10
contract
as
the
party
representing
the
governmental
entity’s
11
or
the
department’s
interest
regarding
administration
and
12
oversight
of
the
project.
13
b.
“Department”
means
the
state
department
of
14
transportation.
15
c.
“Governmental
entity”
means
the
state,
political
16
subdivisions
of
the
state,
public
school
corporations,
and
all
17
officers,
boards,
or
commissions
empowered
by
law
to
enter
18
into
contracts
for
the
construction
of
public
improvements,
19
excluding
the
state
board
of
regents
and
the
department.
20
d.
“Public
improvement”
means
a
building
or
construction
21
work
which
is
constructed
under
the
control
of
a
governmental
22
entity
and
is
paid
for
in
whole
or
in
part
with
funds
of
the
23
governmental
entity,
including
a
building
or
improvement
24
constructed
or
operated
jointly
with
any
other
public
or
25
private
agency,
but
excluding
urban
renewal
demolition
and
26
low-rent
housing
projects,
industrial
aid
projects
authorized
27
under
chapter
419,
emergency
work
or
repair
or
maintenance
28
work
performed
by
employees
of
a
governmental
entity,
and
29
excluding
a
highway,
bridge,
or
culvert
project,
and
excluding
30
construction
or
repair
or
maintenance
work
performed
for
a
city
31
utility
under
chapter
388
by
its
employees
or
performed
for
a
32
rural
water
district
under
chapter
357A
by
its
employees.
33
e.
“Repair
or
maintenance
work”
means
the
preservation
of
a
34
building,
storm
sewer,
sanitary
sewer,
or
other
public
facility
35
-3-
LSB
5704SV
(2)
87
asf/jh
3/
7
S.F.
2236
or
structure
so
that
it
remains
in
sound
or
proper
condition,
1
including
minor
replacements
and
additions
as
necessary
to
2
restore
the
public
facility
or
structure
to
its
original
3
condition
with
the
same
design.
4
f.
“Substantially
completed”
means
the
first
date
on
which
5
any
of
the
following
occurs:
6
(1)
Completion
of
the
public
improvement
project
or
the
7
highway,
bridge,
or
culvert
project
or
when
the
work
on
the
8
public
improvement
or
the
highway,
bridge,
or
culvert
project
9
has
been
substantially
completed
in
general
accordance
with
the
10
terms
and
provisions
of
the
contract.
11
(2)
The
work
on
the
public
improvement
or
on
the
designated
12
portion
is
substantially
completed
in
general
accordance
with
13
the
terms
of
the
contract
so
that
the
governmental
entity
or
14
the
department
can
occupy
or
utilize
the
public
improvement
or
15
designated
portion
of
the
public
improvement
for
its
intended
16
purpose.
This
subparagraph
shall
not
apply
to
highway,
bridge,
17
or
culvert
projects.
18
(3)
The
public
improvement
project
or
the
highway,
bridge,
19
or
culvert
project
is
certified
as
having
been
substantially
20
completed
by
either
of
the
following:
21
(a)
The
architect
or
engineer
authorized
to
make
such
22
certification.
23
(b)
The
authorized
contract
representative.
24
(4)
The
governmental
entity
or
the
department
is
occupying
25
or
utilizing
the
public
improvement
for
its
intended
purpose.
26
This
subparagraph
shall
not
apply
to
highway,
bridge,
or
27
culvert
projects.
28
2.
Payments
made
by
a
governmental
entity
or
the
department
29
for
the
construction
of
public
improvements
and
highway,
30
bridge,
or
culvert
projects
shall
be
made
in
accordance
with
31
the
provisions
of
this
chapter,
except
as
provided
in
this
32
section:
33
a.
At
any
time
after
all
or
any
part
of
the
work
on
the
34
public
improvement
or
highway,
bridge,
or
culvert
project
is
35
-4-
LSB
5704SV
(2)
87
asf/jh
4/
7
S.F.
2236
substantially
completed,
the
contractor
may
request
the
release
1
of
all
or
part
of
the
retained
funds
owed.
The
request
shall
be
2
accompanied
by
a
sworn
statement
of
the
contractor
that,
ten
3
calendar
days
prior
to
filing
the
request,
notice
was
given
as
4
required
by
paragraphs
“f”
and
“g”
to
all
known
subcontractors,
5
sub-subcontractors,
and
suppliers.
6
b.
Except
as
provided
under
paragraph
“c”
,
upon
receipt
of
7
the
request,
the
governmental
entity
or
the
department
shall
8
release
all
or
part
of
the
retained
funds.
Retained
funds
that
9
are
approved
as
payable
shall
be
paid
at
the
time
of
the
next
10
monthly
payment
or
within
thirty
days,
whichever
is
sooner.
If
11
partial
retained
funds
are
released
pursuant
to
a
contractor’s
12
request,
no
retained
funds
shall
be
subsequently
held
based
13
on
that
portion
of
the
work.
If
within
thirty
days
of
when
14
payment
becomes
due
the
governmental
entity
or
the
department
15
does
not
release
the
retained
funds
due,
interest
shall
accrue
16
on
the
amount
of
retained
funds
at
the
rate
of
interest
that
is
17
calculated
as
the
prime
rate
plus
one
percent
per
year
as
of
18
the
day
interest
begins
to
accrue
until
the
amount
is
paid.
19
c.
If
labor
and
materials
are
yet
to
be
provided
at
the
20
time
the
request
for
the
release
of
the
retained
funds
is
made,
21
an
amount
equal
to
two
hundred
percent
of
the
value
of
the
22
labor
or
materials
yet
to
be
provided,
as
determined
by
the
23
governmental
entity’s
or
the
department’s
authorized
contract
24
representative,
may
be
withheld
until
such
labor
or
materials
25
are
provided.
26
d.
An
itemization
of
the
labor
or
materials
yet
to
be
27
provided,
or
the
reason
that
the
request
for
release
of
28
retained
funds
is
denied,
shall
be
provided
to
the
contractor
29
in
writing
within
thirty
calendar
days
of
the
receipt
of
the
30
request
for
release
of
retained
funds.
31
e.
The
contractor
shall
release
retained
funds
to
the
32
subcontractor
or
subcontractors
in
the
same
manner
as
retained
33
funds
are
released
to
the
contractor
by
the
governmental
entity
34
or
the
department.
Each
subcontractor
shall
pass
through
to
35
-5-
LSB
5704SV
(2)
87
asf/jh
5/
7
S.F.
2236
each
lower-tier
subcontractor
all
retained
fund
payments
from
1
the
contractor.
2
f.
Prior
to
applying
for
release
of
retained
funds,
the
3
contractor
shall
send
a
notice
to
all
known
subcontractors,
4
sub-subcontractors,
and
suppliers
that
provided
labor
or
5
materials
for
the
public
improvement
project
or
the
highway,
6
bridge,
or
culvert
project.
7
g.
The
notice
shall
be
substantially
similar
to
the
8
following:
9
NOTICE
OF
CONTRACTOR’S
REQUEST
10
FOR
EARLY
RELEASE
OF
RETAINED
FUNDS
11
You
are
hereby
notified
that
[name
of
contractor]
will
be
12
requesting
an
early
release
of
funds
on
a
public
improvement
13
project
or
a
highway,
bridge,
or
culvert
project
designated
as
14
[name
of
project]
for
which
you
have
or
may
have
provided
labor
15
or
materials.
The
request
will
be
made
pursuant
to
Iowa
Code
16
section
573.28.
The
request
may
be
filed
with
the
[name
of
17
governmental
entity
or
department]
after
ten
calendar
days
from
18
the
date
of
this
notice.
The
purpose
of
the
request
is
to
have
19
[name
of
governmental
entity
or
department]
release
and
pay
20
funds
for
all
work
that
has
been
performed
and
charged
to
[name
21
of
governmental
entity
or
department]
as
of
the
date
of
this
22
notice.
This
notice
is
provided
in
accordance
with
Iowa
Code
23
section
573.28.
24
Sec.
6.
REPEAL.
Section
26.13,
Code
2018,
is
repealed.
25
EXPLANATION
26
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
27
the
explanation’s
substance
by
the
members
of
the
general
assembly.
28
This
bill
relates
to
mechanics’
liens
and
public
29
construction
liens.
30
MECHANIC’S
LIENS.
Under
current
law,
a
lien
statement
may
31
only
be
amended
by
leave
of
court
in
furtherance
of
justice
32
or
as
to
the
amount
demanded.
The
bill
provides
that
a
33
claimant
may
only
amend
a
lien
statement
by
leave
of
court
in
34
furtherance
of
justice
or
to
decrease
the
amount
demanded.
An
35
-6-
LSB
5704SV
(2)
87
asf/jh
6/
7
S.F.
2236
amendment
to
decrease
the
amount
demanded
must
be
accomplished
1
through
the
mechanics’
notice
and
lien
registry.
The
bill
2
provides
that
amending
a
lien
statement
to
decrease
the
amount
3
demanded
does
not
affect
the
priority
of
the
lien
statement.
4
The
bill
also
provides
that
a
lien
statement
shall
not
be
5
amended
to
increase
the
amount
demanded.
6
PUBLIC
CONSTRUCTION
LIENS.
Current
Code
section
573.15
7
provides
an
exception
to
the
requirement
that
a
public
8
corporation
retain
a
portion
of
funds
due
a
contractor
on
a
9
public
improvement
project
in
a
fund
for
the
payment
of
claims
10
for
materials
furnished
and
labor
performed.
The
exception
11
provides
that
a
public
corporation
need
only
retain
funds
due
a
12
supplier
of
material
to
a
general
contractor
if
the
supplier
13
provides
the
general
contractor
with
one
of
two
permitted
types
14
of
notice
after
the
materials
are
supplied.
The
bill
provides
15
that,
in
addition
to
claims
for
materials,
the
exception
shall
16
apply
to
claims
for
labor,
service,
or
transportation.
The
17
bill
also
amends
the
notice
requirement
to
provide
that
a
18
supplier
of
labor,
materials,
service,
or
transportation
to
a
19
general
contractor
must
give
only
one
type
of
notice,
along
20
with
a
certified
statement
that
such
notice
was
given.
21
The
bill
repeals
Code
section
26.13
(public
construction
22
bidding
——
early
release
of
retained
funds),
creates
new
Code
23
section
573.28
with
the
same
language
except
for
corrected
24
internal
references,
and
provides
that
the
Code
section
no
25
longer
applies
to
all
competitive
bidding
done
pursuant
to
Code
26
section
26.3
or
314.1.
27
-7-
LSB
5704SV
(2)
87
asf/jh
7/
7