Two years ago, the Iowa legislature amended the centuries-old mechanic’s lien law, including additional protections for homeowners. As a result of these changes, homeowners undergoing renovations or repairs on their property could receive a number of additional notices. Homeowners frequently panic when they see the word “lien,” but these notices are specifically made to inform you of your rights if a future lien issue arises.
A mechanic’s lien is a lien against your property by a contractor, subcontractor or construction material provider due to nonpayment for construction or repair services performed on the property. If a contractor or subcontractor is not paid and files a mechanic’s lien within 90 days of the last day he worked on the project, he can collect against the homeowner even if that homeowner properly paid another party for those services. Most mechanic’s liens are filed when a homeowner does not make timely payment, though a general contractor’s late payment to a subcontractor can also trigger a lien.
A homeowner may receive up to three preliminary notices about mechanic’s liens when a contractor is renovating or repairing his home. First, when a general contractor provides a homeowner with a written contract for the work to be performed, it will likely include an initial notice that companies providing labor or materials may enforce a lien on the property. This notice must be in boldfaced 10-point type, and should be in a document separate from the contract itself.
Once work has begun, the general contractor files a “Commencement of Work Notice” with the Secretary of State. The Secretary of State sends the property owner another notice. Without this notice on file, neither the general contractor nor its subcontractors or material providers may file a lien on the property.
Third, a subcontractor or material provider working on the home must provide his own notice. Again, this notice may be received from the Secretary of State’s office. Alternatively, the subcontractor may send it to the homeowner via certified mail or provide the notice in person to the homeowner.
There is no need to panic when you receive a notice with that dreaded four-letter word. The vast majority of contractors are reputable, and are simply trying to protect themselves and you should a problem arise. Choose your contractor wisely, stay in frequent contact with him during construction, and make timely payments, and your renovation should conclude without any lien issues.