SSB 1229 (LSB 2311XC (1) 85)

SENATE FILE _____

BY  (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON HOGG)

A BILL FOR

An Act relating to mechanic’s liens and the mechanics’ notice and lien registry.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 572.8, subsection 1, paragraphs b and e, Code 2013, are amended to read as follows:
   b.  The legal description of
 
that accurately describes the property to be charged with the lien.
   e.  The tax parcel identification number
 
required by law to be assigned to the property for real estate tax administration purposes.
    Sec. 2.  Section 572.11, Code 2013, is amended to read as follows:
   572.11  Extent of lien posted after ninety days.
   Liens perfected under section 572.10 shall be enforced against the property or upon the bond, if given, by the owner or by the owner-builder’s buyer, only to the extent of the balance due from the owner to the general contractor or from the owner-builder’s buyer to the owner-builder at the time of the service of such notice; but if the bond was given by the general contractor or owner-builder, or person contracting with the subcontractor filing
 
posting the claim for a lien, such bond shall be enforced to the full extent of the amount found due the subcontractor.
    Sec. 3.  Section 572.13A, subsections 1 and 2, Code 2013, are amended to read as follows:
   1.  A general contractor, or owner-builder who has contracted or will contract with a subcontractor to provide labor or furnish material for the property, shall post a notice of commencement of work to the mechanics’ notice and lien registry internet website within
 
no later than ten days of
 
after the commencement of work on the property. A notice of commencement of work is effective only as to any labor, service, equipment, or material furnished to the property subsequent to the posting of the notice of commencement of work. A notice of commencement of work shall include all of the following information:
   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 of
 
that accurately describes the property
 
to be charged with the lien.
   e.  The date work commenced.
   f.  The tax parcel identification number
 
required by law to be assigned to the property for real estate tax administration purposes.
   g.  Any other information prescribed by the administrator pursuant to rule.
   2.  If a general contractor or owner-builder fails to post the required notice of commencement of work to the mechanics’ notice and lien registry internet website pursuant to subsection 1, within
 
no later than ten days of
 
after the commencement of the work on the property, a subcontractor may post the notice in conjunction with the filing
 
posting of the required preliminary notice pursuant to section 572.13B. A notice of commencement of work must be posted to the mechanics’ notice and lien registry internet website before preliminary notices pursuant to section 572.13B may be posted.
    Sec. 4.  Section 572.13A, subsection 3, paragraph c, Code 2013, is amended to read as follows:
   c.  The notice described in subsection 1 shall be sent to the owner’s address
 
as posted to the mechanics’ notice and lien registry by the general contractor, owner-builder, or subcontractor. If the owner’s address is different than the property address, a copy of the notice shall also be sent to the property address, addressed to the owner.
    Sec. 5.  Section 572.13A, subsection 3, Code 2013, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  d.  Notices under this section shall not be sent to owner-builders.
    Sec. 6.  Section 572.13B, subsection 1, paragraphs g and i, Code 2013, are amended to read as follows:
   g.  The legal description of
 
that accurately describes the property
 
to be charged with the lien.
   i.  The tax parcel identification number
 
required by law to be assigned to the property for real estate tax administration purposes.
    Sec. 7.  Section 572.13B, subsection 2, Code 2013, is amended to read as follows:
   2.  At the time a preliminary notice is posted to the mechanics’ notice and lien registry, the administrator shall send notification to the owner, including the owner notice described in section 572.13, subsection 1, and shall docket
 
post the mailing of the notice on the mechanics’ notice and lien registry as prescribed by the administrator pursuant to rule. Notices under this section shall not be sent to owner-builders. Upon request, the administrator shall provide an affidavit of mailing
 
proof of service at no cost for the notice required under this section.
    Sec. 8.  Section 572.15, Code 2013, is amended to read as follows:
   572.15  Discharge of mechanic’s lien —— bond.
   A mechanic’s lien may be discharged at any time by submitting a bond to the administrator in twice the amount of the sum for which the claim for the lien is filed
 
posted, with surety or sureties, to be approved by the administrator, conditioned for the payment of any sum for which the claimant may obtain judgment upon the claim.
    Sec. 9.  Section 572.19, Code 2013, is amended to read as follows:
   572.19  Priority over garnishments of the owner.
   Mechanics’ liens shall take priority of
 
over all garnishments of the owner for the contract debts, whether made prior or subsequent to the commencement of the furnishing of the material or performance of the labor, without regard to the date of filing
 
posting the claim for such lien.
    Sec. 10.  Section 572.22, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   The administrator shall endorse upon every claim for a mechanic’s lien posted to the mechanics’ notice and lien registry internet website the date and hour of posting. Each claim
 
posted to the mechanics’ notice and lien registry internet website shall be properly indexed and shall contain the following items:
    Sec. 11.  Section 572.22, subsections 5 and 6, Code 2013, are amended to read as follows:
   5.  The legal description of
 
that accurately describes the property to be charged
 
with the lien.
   6.  The tax parcel identification number of the property to be charged
 
required by law to be assigned to the property for real estate tax administration purposes.
    Sec. 12.  Section 572.23, Code 2013, is amended to read as follows:
   572.23  Acknowledgment of satisfaction of claim.
   1.  When a mechanic’s lien is satisfied by payment of the claim, the claimant shall acknowledge
 
post to the mechanics’ notice and lien registry an acknowledgment of satisfaction thereof
 
of claim and, if the claimant neglects to do so for thirty days after demand in writing is personally served upon the claimant, the claimant shall forfeit and pay twenty-five dollars to the owner, general contractor, or owner-builder and be liable to any person injured to the extent of the injury.
   2.  If satisfaction is not acknowledged
 
an acknowledgment of satisfaction of claim is not posted to the mechanics’ notice and lien registry within thirty days after service of the demand in writing, the party serving the demand or causing the demand to be served may file for record with the administrator
 
post to the mechanics’ notice and lien registry a copy of the demand with proofs of service attached and endorsed and, in case of service by publication, a personal affidavit that personal service could not be made within this state. Upon completion of the requirements of this subsection, the record
 
posting shall be constructive notice to all parties of the due forfeiture and cancellation of the lien. Upon the filing
 
posting of the demand with the required attachments, the administrator shall mail a date-stamped copy of the demand to both parties.
    Sec. 13.  NEW SECTION.  572.23A  Partial satisfaction of money debt after posting notice.
   1.  A general contractor or subcontractor shall post an acknowledgment of partial satisfaction of a money debt to the mechanics’ notice and lien registry for material, labor, and equipment furnished by the general contractor or subcontractor.
   2.  If an acknowledgment of partial satisfaction pursuant to subsection 1 is not posted to the mechanic’s notice and lien registry within thirty days after receipt of written demand from the owner, general contractor, or owner-builder, the owner, general contractor, or owner-builder may post an acknowledgment of partial satisfaction of the money debt and a copy of the written demand to the mechanics’ notice and lien registry.
   3.  This section applies in situations where the required notices pursuant to sections 572.13A and 572.13B have been posted to the mechanics’ notice and lien registry but a mechanic’s lien has not been posted.
    Sec. 14.  Section 572.28, subsection 1, Code 2013, is amended to read as follows:
   1.  Upon the written demand of the owner served on the lienholder
 
claimant requiring the lienholder
 
claimant to commence action to enforce the lien, such action shall be commenced within thirty days thereafter, or the lien and all benefits derived therefrom shall be forfeited.
    Sec. 15.  Section 572.30, subsection 2, Code 2013, is amended to read as follows:
   2.  Within fifteen days after receiving notice of nonpayment the general contractor or owner-builder gives a bond or makes a deposit with the administrator, in an amount not less than the amount necessary to satisfy the nonpayment for which notice has been given under this section, and in a form approved by a judge of the district court
 
the administrator, to hold harmless the owner or person having the improvement made from any claim for payment of anyone furnishing labor or material for the improvement, other than the general contractor or owner-builder.
    Sec. 16.  Section 572.31, Code 2013, is amended to read as follows:
   572.31  Cooperative and condominium housing.
   A lien arising under this chapter as a result of the construction of an apartment house or apartment building which is owned on a cooperative basis under chapter 499A, or which is submitted to a horizontal property regime under chapter 499B, is not enforceable, notwithstanding any contrary provision of this chapter, as against the interests of an owner in a unit contained in the apartment house or apartment building acquired in good faith and for valuable consideration, unless a lien statement specifically describing the unit is filed
 
posted under section 572.8 within the applicable time period specified in section 572.9, but determined from the date on which the last of the material was supplied or the last of the labor was performed in the construction of that unit.
    Sec. 17.  Section 572.33A, Code 2013, is amended to read as follows:
   572.33A  Liability of owner to general contractor —— commercial construction.
   1.  An owner of a building, land, or improvement upon which a mechanic’s lien of a subcontractor may be filed
 
posted, is not required to pay the general contractor for compensation for work done or material furnished for the building, land, or improvement until the expiration of ninety days after the completion of the building or improvement unless the general contractor furnishes to the owner one of the following:
   1.

a.  Receipts and waivers of claims for mechanics’ liens, signed by all persons who furnished material or performed labor for the building, land, or improvement.
   2.

b.  A good and sufficient bond to be approved by the owner, conditioned that the owner shall be held harmless from any loss which the owner may sustain by reason of the filing
 
posting of mechanics’ liens by subcontractors.
   2.  This section applies only to commercial construction properties.
    Sec. 18.  Section 572.34, Code 2013, is amended to read as follows:
   572.34  Mechanics’ notice and lien registry —— residential construction.
   1.  A mechanics’ notice and lien registry is created and shall be administered by the administrator. The administrator shall adopt rules pursuant to chapter 17A for the creation and administration of the registry.
   2.  The mechanics’ notice and lien registry shall be accessible to the general public through the administrator’s internet website.
   3.
  a.  The administrator shall index the legal descriptions of the properties for which notices and liens are posted to the registry. For the purpose of performing a search of the registry the legal description shall be the controlling index category.
   b.  The registry shall be indexed by owner name, general contractor name, mechanics’ notice and lien registry number, property address, legal description, tax parcel identification number
 
required by law to be assigned to the property for real estate tax administration purposes, and any other identifier considered appropriate as determined by the administrator pursuant to rule.
   4.  A general contractor, owner-builder, or subcontractor
 
Any person who posts fictitious, forged, or false information to the mechanics’ notice and lien registry shall be subject to a penalty as determined by the administrator by rule in addition to all other penalties and remedies available under applicable law.
   5.  A person may post a correction statement with respect to a record indexed in
 
on the mechanics’ notice and lien registry internet website if the person believes the record is inaccurate or wrongfully posted.
   6.  The administrator shall charge and collect fees as established by rule necessary for the administration and maintenance of the registry and the registry’s internet website. The administrator shall not charge a filing
 
posting fee for a preliminary notice required pursuant to this chapter that exceeds the cost of sending such notice by certified mail with restricted delivery and return receipt. The administrator shall not charge a filing
 
posting fee for a mechanic’s lien that exceeds forty dollars.
   7.  Notices may
 
shall be posted to the mechanics’ notice and lien registry electronically on the administrator’s internet website, or may be sent to the administrator for posting by United States mail or facsimile transmission, or other alternate method as provided by the administrator pursuant to rule. Notices received by United States mail or facsimile transmission shall be posted by the administrator to the mechanics’ notice and lien registry within three business days of receipt.
   8.  Mechanics’ liens may
 
shall be posted to the mechanics’ notice and lien registry electronically on the administrator’s internet website or may be sent to the administrator for posting by United States mail. Liens received by United States mail shall be posted by the administrator to the mechanics’ notice and lien registry within three business days of receipt.
   9.  The administrator shall send a receipt acknowledging a notice or lien submitted by United States mail or facsimile transmission, as provided by the administrator by rule.
   9.  The posting of a notice or a lien to the mechanics’ notice and lien registry internet website pursuant to this chapter, along with the tender of the requisite filing fees and the sending of an acknowledgment receipt by the administrator, is equivalent to a filing and recording of the appropriate notice or lien in the county in which the real estate is located.
   10.  Information collected by and furnished to the administrator in conjunction with the submission and posting of notices pursuant to sections 572.13A and 572.13B shall be used by the administrator solely for the purposes of the mechanics’ notice and lien registry.
   11.  Registration under chapter 91C shall not be required in order to post a notice or a lien under this chapter.
   12.  A preliminary notice that remains posted on the mechanics’ notice and lien registry internet website two years after the date of posting shall be declared inactive by the administrator, unless renewed. A notice of commencement of work, if there are no related active postings, shall be declared inactive two years from the date of posting, unless renewed. The administrator shall establish a process for the removal of inactive notices and for the renewal of notices pursuant to rule.
   12.

13.  The administrator shall make, or cause to be made, preservation duplicates of mechanics’ notice and lien registry records, including records stored in a computer database. Any preservation duplicate record shall be accurate, complete, and clear, and shall be made, preserved, and made accessible to the public by means designated by the administrator by rule.
EXPLANATION
   This bill makes conforming language corrections relating to the posting of precommencement and preliminary notices and mechanic’s liens on the mechanics’ notice and lien registry (registry) and related civil enforcement actions, to be consistent with changes made in HF 675 (2012). 
   The bill also amends provisions relating to certain property information required for precommencement and preliminary notices.
   The bill specifies that general contractors and owner-builders do not have to send precommencement notices to owner-builders. 
   The bill requires the administrator (secretary of state) to provide proof of service for notices posted on the registry and eliminates the requirement that the administrator endorse every claim for a mechanic’s lien posted on the registry. 
   The bill specifies that each claim posted to the registry internet website shall be properly indexed by the administrator, and shall include items including the name of the person who posted the claim, the date and hour of the posting, and the amount of the claim. The bill makes changes to the registry indexing requirements and requires the administrator to index the legal descriptions of the properties for which notices and liens are posted to the registry.
   The bill provides that when a mechanic’s lien is satisfied by payment of the claim, the claimant must acknowledge satisfaction by posting an acknowledgment of the satisfaction to the registry. If such an acknowledgment is not posted to the registry within 30 days after service of the demand in writing, the party serving the demand may post a copy of the demand to the registry.
   The bill provides that a general contractor or subcontractor shall post an acknowledgment of partial satisfaction of a money debt to the mechanics’ notice and lien registry for material, labor, and equipment furnished by the general contractor or subcontractor. If an acknowledgment of partial satisfaction is not posted to the registry within 30 days after receipt of written demand from the owner, general contractor, or owner-builder, the owner, general contractor, or owner-builder may post an acknowledgment of partial satisfaction of the money debt and a copy of the written demand to the mechanics’ notice and lien registry. This provision applies in situations where the required notices pursuant to Code sections 572.13A and 572.13B have been posted to the mechanics’ notice and lien registry but a mechanic’s lien has not been posted.
   The bill provides that in a civil action by a subcontractor or owner against a general contractor or owner-builder, a bond given by a general contractor or owner-builder shall be approved by the administrator instead of the court.
   The bill provides that the posting by any person of fictitious, forged, or false information to the registry is subject to a penalty as determined by the administrator.
   The bill provides that precommencement and preliminary notices and mechanic’s liens shall be posted to the mechanics’ notice and lien registry electronically on the administrator’s internet website.
   The bill provides that the posting of a notice or a lien to the mechanics’ notice and lien registry internet website along with the requisite filing fees and the sending of an acknowledgment receipt by the administrator is equivalent to a filing and recording of the appropriate notice or lien in the county in which the real estate is located.
   The bill provides that a preliminary notice that remains posted on the mechanics’ notice and lien registry internet website two years after the date of posting shall be declared inactive by the administrator, unless renewed. A commencement of work, if there are no related active postings, shall be declared inactive two years from the date of posting, unless renewed. The administrator is also required to establish a process for the removal of inactive notices and for the renewal of notices pursuant to rule.