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Home builders have new requirements

Home builders have new requirements

Home builders have new obligations under the revised mechanic’s liens laws in Iowa, which went into effect on Jan. 1.

The revisions created a Mechanic’s Notice & Lien Registry (MNLR) with the Iowa Secretary of State to serve as a central filing system for notices and liens on a statewide level, rather than the previous system which required filings at the county level. The MNLR can be found at https://sos.iowa.gov/mnlr/index.aspx.

In addition to establishing the MNLR, the revised mechanic’s lien law also created new notice requirements for residential construction. In order to be entitled to a mechanic’s lien for residential construction, home builders must give two notices early in the construction project.

Notice to home owner

Home builders (general contractors) who have or will have subcontractors provide labor or materials for residential construction projects must provide a pre-lien notice to the home owner. The notice must be written in at least 10-point font and must state as follows:

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 of commencement of work

Home builders must also file a notice on the MNLR within 10 days of starting construction on a residence. The “Notice of Commencement of Work” form is available on the Iowa Secretary of State’s website and contains information about the property, the owner and the home builder. After the notice is electronically filed and a $7 posting fee is paid (the fee is $10 for paper-filed notices), an MNLR identification number is assigned to the home builder. Subcontractors then use the home builder’s MNLR identification number when filing their notices on the MNLR.

Note that to post items on the MNLR, the user must create an account. There is no charge to establish an account, and accounts are created by providing the user’s basic contact information on the Secretary of State’s web site at https://sos.iowa.gov/mnlr/account/create.aspx.

Mechanic’s lien

The form and timeframes for the filing of mechanic’s liens have not changed under Iowa’s revised mechanic’s lien law. However, mechanic’s liens are now electronically filed on the MNLR instead of being filed with the recorder in the county where the property is located. County recorders will no longer accept mechanic’s liens for recording.

Mechanic’s liens are a powerful tool to help home builders collect the amounts owed to them. Iowa home builders need to be aware of the new notice requirements in order to preserve the right to file a mechanic’s lien.

For more information, visit the MNLR website at https://sos.iowa.gov/mnlr/index.aspx and the MNLR toll-free telephone number is (888) 767-8683.

Marty Stoll is an attorney and senior vice president at Shuttleworth & Ingersoll, P.L.C. Her practice focuses on real estate law and title work, commercial litigation, and general business law.

This post was also published by the Corridor Business Journal.

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