H.F. _____ Section 1. NEW SECTION . 570B.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Broker” means a real estate broker licensed under 4 chapter 543B. 5 2. “Commercial property” means any parcel of real estate 6 in this state other than real estate containing one to four 7 residential units. “Commercial property” does not include 8 single-family residential units such as condominiums, 9 townhouses, manufactured housing, or homes in a subdivision 10 when sold, leased, or otherwise conveyed on a unit-by-unit 11 basis, even though these units may be a part of a larger 12 building or parcel of real estate containing more than four 13 residential units. “Commercial property” also does not include 14 real estate owned by a governmental entity. 15 3. “Governmental entity” means this state, a city, county, 16 district, institution under the control of the state board 17 of regents, a school corporation, any other governmental 18 subdivision, or any other public agency. 19 4. “Lien property” means any interest in commercial property 20 against which a broker has a lien pursuant to this chapter. 21 5. “Owner” means a person who has a legal or equitable 22 interest in a lien property and who enters into, or has 23 previously entered into, a written contract with a broker for 24 services related to selling, exchanging, purchasing, renting, 25 or leasing any interest in the lien property. 26 Sec. 2. NEW SECTION . 570B.2 Broker’s lien. 27 1. A broker that enters into a written contract for 28 services related to selling, exchanging, renting, leasing, or 29 conveying an interest in commercial property has a lien on 30 that commercial property. The lien is effective only if the 31 contract for services is in writing and is signed by the broker 32 or the broker’s agent and the owner of the lien property or the 33 owner’s agent. 34 2. A broker that enters into a written contract for services 35 -1- LSB 2201HC (3) 86 jh/rj 1/ 9

H.F. _____ related to purchasing an interest in commercial property 1 has a lien on any commercial property purchased pursuant to 2 that contract. The lien is effective only if the contract 3 for services is in writing and is signed by the broker or 4 the broker’s agent and the owner of the lien property or the 5 owner’s agent. 6 3. a. Only the broker named in the contract has a lien 7 pursuant to this section and a lien is not available to any 8 employee or independent contractor of the broker. 9 b. The amount of a lien for services related to selling, 10 exchanging, or conveying an interest in commercial property 11 is limited to the amount due to the broker pursuant to the 12 contract. If the amount due to the broker is payable in 13 installments, a portion of which is due after conveyance, the 14 amount of the lien is limited to the amount due to the broker 15 prior to or upon conveyance. 16 c. The amount of a lien for services related to leasing 17 or renting an interest in commercial property is limited to 18 the amount due to the broker pursuant to the contract. If 19 the amount due to the broker is payable in installments, the 20 amount of the lien is limited to the amount of all installment 21 payments due to the broker over the life of the contract, minus 22 the amount of any installment payments made under the contract 23 prior to the time of the owner’s default. 24 d. The amount of a lien for services related to purchasing 25 an interest in commercial property is limited to the amount due 26 to the broker pursuant to the contract. If the amount due to 27 the broker is payable in installments, the amount of the lien 28 is limited to the amount of all installment payments due to the 29 broker over the life of the contract, minus the amount of any 30 installment payments made under the contract prior to the time 31 the lien is filed. 32 e. The lien is effective only against the interest in 33 commercial property that is the subject of the contract. 34 Sec. 3. NEW SECTION . 570B.3 Perfection of lien. 35 -2- LSB 2201HC (3) 86 jh/rj 2/ 9

H.F. _____ 1. a. A lien established pursuant to section 570B.2 is 1 perfected when the broker is entitled to a fee or commission 2 under the contract and has met the requirements of subsection 3 2. 4 b. The lien is perfected as of the date the requirements of 5 paragraph “a” are met and does not relate back to an earlier 6 date. 7 2. To perfect a lien pursuant to subsection 1, paragraph 8 “a” , a broker shall comply with all of the following: 9 a. The broker shall record a lien in the county recorder’s 10 office of the county in which the commercial property is 11 located. The recorder shall endorse on each notice of lien the 12 day, hour, and minute when filed for recording and the document 13 reference number, shall index the notice in the index and shall 14 record the lien in the manner provided for recording real 15 estate mortgages. The recorder shall charge and collect the 16 fees set forth in section 331.604 for the recorder’s services. 17 b. (1) The notice of lien shall include the name of the 18 broker who has the lien, the name of the owner of the lien 19 property, a legal description of the lien property, the amount 20 for which the lien is claimed, the date and a summary of the 21 written contract on which the lien is based, and the real 22 estate broker license number of the broker. The notice of lien 23 shall state that the information contained in the notice is 24 true and accurate to the knowledge of the signatory, be signed 25 by the broker or the broker’s agent, and be verified. 26 (2) For purposes of subparagraph (1), a description that 27 is sufficient to describe the lien property for the purpose 28 of conveyance, or is contained in the instrument by which the 29 owner took title, is a legal description. 30 c. A notice of lien based on the sale, exchange, or 31 conveyance of lien property shall be recorded prior to the 32 conveyance of the property. 33 d. A notice of lien based on the purchase of lien property 34 shall be recorded within ninety days after the conveyance of 35 -3- LSB 2201HC (3) 86 jh/rj 3/ 9

H.F. _____ the property. 1 e. A notice of lien based on a lease or rental of lien 2 property shall be recorded within ninety days after a default 3 by the owner in the payment of an amount due under a written 4 contract for services related to leasing or renting the lien 5 property. 6 f. On the day the notice of lien is recorded, the broker 7 shall provide a copy of the notice of lien to the owner of 8 the lien property and, where a contract for the sale or other 9 conveyance of the lien property has been entered into, to 10 the prospective transferee, where known, either by personal 11 delivery or by certified mail, return receipt requested. 12 3. Initial leases, lease renewals, and expansions of the 13 space leased shall be treated as separate leases for purposes 14 of subsection 2, paragraph “e” . 15 Sec. 4. NEW SECTION . 570B.4 Proceedings to enforce lien. 16 1. To commence proceedings to enforce a lien, a broker shall 17 comply with all of the following: 18 a. The broker shall file a complaint in the district court 19 in the county where the lien property, or some part of the lien 20 property, is located. 21 b. (1) The complaint shall be filed within two years 22 following the recording of the notice of lien as provided in 23 section 570B.3, subsection 2. 24 (2) Failure to file a complaint within the time specified in 25 this section extinguishes the lien, in which case no subsequent 26 notice of lien may be recorded for the same claim and the claim 27 shall not be asserted in any proceeding under this section. 28 c. A complaint shall identify the contract upon which 29 the lien is based and the date of the contract, describe the 30 services performed by the broker pursuant to the contract, 31 specify the unpaid amounts due to the broker pursuant to the 32 contract, specify the address of the lien property, and have a 33 copy of the contract attached. 34 d. The broker shall name as defendants in the complaint all 35 -4- LSB 2201HC (3) 86 jh/rj 4/ 9

H.F. _____ parties that have a legal or equitable interest in the lien 1 property of whom the broker has knowledge. 2 2. a. The owner may demand that the broker commence a 3 suit to enforce a broker’s lien by serving a written notice of 4 demand on the broker by personal delivery or by certified mail, 5 return receipt requested. 6 b. If the broker does not commence the suit or file the 7 answer demanded within twenty-eight days after receipt of the 8 notice of demand, the lien is extinguished and no subsequent 9 notice of lien may be recorded for the same claim and the claim 10 shall not be asserted in any proceeding under this section. 11 3. In an action based on a broker’s lien, a court may assess 12 the nonprevailing parties with costs and reasonable attorney 13 fees incurred by the prevailing parties. The court shall 14 equitably apportion the assessed costs and attorney fees among 15 all responsible nonprevailing parties. 16 Sec. 5. NEW SECTION . 570B.5 Sale of foreclosed property —— 17 alternative dispute resolution. 18 1. When a lien claimed under this chapter is enforced, a 19 sale of the lien property shall be ordered by the court having 20 jurisdiction unless the parties agree to proceed pursuant to 21 subsection 2. 22 2. If the broker and owner agree to alternative dispute 23 resolution, the claim shall be heard and resolved in the agreed 24 upon alternative-dispute-resolution forum. The court shall 25 retain jurisdiction to enter and enforce the award or other 26 result of alternative dispute resolution on all interested 27 parties to the foreclosure. 28 Sec. 6. NEW SECTION . 570B.6 Broker to record release or 29 satisfaction. 30 1. A broker shall record a written release or satisfaction 31 of the broker’s lien in the county recorder’s office of the 32 county in which the lien was recorded within ten days after any 33 of the following: 34 a. Moneys in an amount sufficient to release the broker’s 35 -5- LSB 2201HC (3) 86 jh/rj 5/ 9

H.F. _____ lien established pursuant to section 570B.2 have been deposited 1 in an escrow account established pursuant to section 570B.8. 2 b. The owner satisfies the claim upon which the broker’s 3 lien is based. 4 c. The broker fails to file a claim to enforce a lien within 5 the time specified in section 570B.4. 6 d. The claim upon which the broker’s lien is based has been 7 resolved by a written agreement of the broker and owner, by a 8 court, or by any process agreed to by the broker and owner. 9 2. On the day the release or satisfaction is recorded, the 10 broker shall provide the owner with a copy of the release or 11 satisfaction by personal delivery or by certified mail, return 12 receipt requested. 13 Sec. 7. NEW SECTION . 570B.7 Priority of mechanic’s and 14 other liens and mortgages. 15 All valid mechanic’s liens, arising pursuant to and 16 perfected in accordance with chapter 572, and all prior 17 recorded liens and mortgages have priority over a broker’s lien 18 perfected pursuant to section 570B.3. 19 Sec. 8. NEW SECTION . 570B.8 Transfer of lien property —— 20 escrow account. 21 1. Except as provided in subsection 4, to enable a transfer 22 of lien property to close when a broker’s perfected lien may 23 otherwise prevent the closing, a separate escrow account shall 24 be established by the owner into which moneys from the proceeds 25 of the closing shall be deposited in an amount sufficient to 26 release the broker’s lien. The moneys shall be held in escrow 27 and shall only be released as ordered by a court of competent 28 jurisdiction, or as directed by agreement of the broker and 29 owner or by any process agreed to by the broker and owner. 30 2. An owner shall not refuse to close a transfer of lien 31 property because of the requirement to establish an escrow 32 account under subsection 1. A prospective transferee of lien 33 property shall not refuse to close the transfer of the lien 34 property solely because the broker recorded a notice of lien 35 -6- LSB 2201HC (3) 86 jh/rj 6/ 9

H.F. _____ under this section, if all of the following have occurred: 1 a. The owner has established the escrow account required by 2 subsection 1. 3 b. The prospective transferee has received from the 4 escrow agent for the escrow account required by subsection 5 1 a verified statement that the escrow account has been 6 established. 7 3. When funds have been placed in escrow pursuant to 8 subsection 1, the broker claiming a broker’s lien under this 9 chapter has an equitable lien on the escrowed funds, and the 10 lien recorded on the lien property shall be extinguished as a 11 matter of law. 12 4. The broker and owner are not required to follow the 13 escrow procedures described in this section if either of the 14 following applies: 15 a. An alternative procedure is available that would allow 16 the transfer of lien property to close and that procedure is 17 acceptable to the broker and prospective transferee. 18 b. The proceeds from the transfer of lien property would be 19 insufficient to release all liens, including the broker’s lien, 20 that are claimed against the lien property. 21 Sec. 9. NEW SECTION . 570B.9 Liability of broker. 22 A broker that asserts or records a spurious or materially 23 inaccurate broker’s lien under this chapter or fails to release 24 or acknowledge release or satisfaction of a broker’s lien in 25 compliance with this chapter, is liable for damages incurred 26 by any person who has a legal or equitable interest in the lien 27 property. 28 EXPLANATION 29 The inclusion of this explanation does not constitute agreement with 30 the explanation’s substance by the members of the general assembly. 31 This bill relates to the filing of a broker’s lien by a 32 broker against an interest in commercial property that is the 33 subject of a contract between the broker and the owner. 34 The bill defines “broker” as a real estate broker licensed 35 -7- LSB 2201HC (3) 86 jh/rj 7/ 9

H.F. _____ under Code chapter 543B. The bill defines “commercial 1 property” as any parcel of real estate in Iowa other than real 2 estate containing one to four residential units. The bill 3 excludes from the definition of “commercial property” any real 4 estate a governmental entity owns. 5 The bill provides that a broker who enters into a signed, 6 written contract with an owner of commercial property for 7 services related to selling, exchanging, purchasing, renting, 8 leasing, or conveying any interest in the commercial property 9 has a lien on that commercial property. The lien is effective 10 only against the interest in the commercial property that is 11 the subject of the contract. 12 The bill provides the manner in which a broker may perfect a 13 broker’s lien. A broker’s lien is perfected when the broker 14 is entitled to a fee or commission under the contract, has 15 recorded a notice of lien in the county recorder’s office, 16 and the broker has provided a copy of the notice of lien to 17 the owner or prospective transferee. The bill specifies the 18 information that must be included in the notice of lien. The 19 bill provides when a notice of lien must be recorded. 20 The bill provides that a broker must commence proceedings to 21 enforce a lien within two years following the recording of the 22 notice of lien. Failure to timely file extinguishes the lien, 23 and the broker shall not file a subsequent notice of lien for 24 the same claim. 25 The bill provides that an owner may demand that a broker 26 commence a suit to enforce a broker’s lien, and if the 27 broker does not commence the suit within 28 days, the lien is 28 extinguished, and the broker shall not file a subsequent notice 29 of lien for the same claim. 30 The bill provides that when a broker’s lien is enforced, 31 a court shall order the sale of the lien property unless the 32 parties agree to alternative dispute resolution. 33 The bill requires a broker to record a written release of 34 the broker’s lien within 10 days after a sufficient amount 35 -8- LSB 2201HC (3) 86 jh/rj 8/ 9

H.F. _____ of moneys to release the lien has been placed in an escrow 1 account, the owner satisfies the claim, the broker fails to 2 timely enforce the lien, the claim upon which the lien is based 3 is resolved, or any other process agreed to by the broker and 4 owner. 5 The bill provides that a valid mechanic’s lien and all prior 6 recorded liens and mortgages have priority over a perfected 7 broker’s lien. 8 The bill provides the process by which a broker and owner 9 may establish an escrow account with the amount sufficient 10 to release the broker’s lien to enable a transfer of an 11 interest in commercial property to close. If funds are 12 placed in escrow, the broker claiming a broker’s lien has an 13 equitable lien on the escrowed funds, and the broker’s lien is 14 extinguished as a matter of law. 15 The bill provides that a broker that asserts or records a 16 spurious broker’s lien or fails to timely release a broker’s 17 lien is liable for damages incurred by any person who has a 18 legal or equitable interest in the lien property. 19 -9- LSB 2201HC (3) 86 jh/rj 9/ 9