Iowa House Bill 675 changes mechanics’ liens surety bond requirements

House Bill 675

On January 1, 2013, Iowa House Bill 675, which alters surety bond requirements for mechanics’ liens in the state, will go into effect. Previously these types of bonds could only be posted by the effected principal, owner, contractor or intermediate subcontractor. The new law — signed by Gov. Terry Branstad on April 27, 2012 — ultimately broadens the bond requirement as it does not specifically name who can post the bond.

The California Contractors State License Board, a leader in online construction industry resources, explains how mechanics’ liens work.

“A mechanics lien is a ‘hold’ against your property, filed by an unpaid contractor, subcontractor, laborer, or material supplier, and is recorded with the county recorder’s office. If unpaid, it allows a foreclosure action, forcing the sale of the property in lieu of compensation.

A lien can result when the prime contractor…has not paid subcontractors, laborers, or suppliers. Legally, the homeowner is ultimately responsible for payment — even if they already have paid the direct contractor.”

The change to how Iowa manages the filing of mechanics’ liens is explained in section 12 (572.15) of HB 675.

“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, with surety or sureties, to be approved by the clerk administrator, conditioned for the payment of any sum for which the claimant may obtain judgment upon the claim.”

Furthermore, a new section, 572.33A, was added to explain the liability of an owner to the general contractor of commercial construction under a lien.

An owner of a building, land, or improvement upon which a mechanic’s lien of a subcontractor may be filed, 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. 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. 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 of mechanics’ liens by subcontractors.

If you need a surety bond in Iowa (or any other state) for lien purposes, contact online or by phone at 1 (800) 308-4358. Our reputable surety bond company has a history of helping our customers get the bonds they need as easily, accurately and quickly as possible.

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