Monday, April 29, 2013

Agricultural and harvester's liens in four paragraphs.

When people think of liens, they think of mechanic's liens. There are a number of other liens, two of which are agricultural and harvester's liens. Neither can be completely summarized in four paragraphs. Very generally, an agricultural lienor is a supplier and a harvesting lienor is a "farmhand." Agricultural liens have a broader scope than harvester's liens. An agricultural lien is an interest in farm products or livestock securing payment for goods or services provided in connection with a debtor's farming operation (and a few other circumstances mainly dealing with the rental or lease of land).

Harvester's liens apply only to "harvesters." Harvesters bale, chop, combine, cut, husk, pick, shell, stack, thresh and windrow crops. Under Iowa law, crops include corn, soybeans, hay, straw, and crops produced on trees, vines or bushes. If a harvester works on a farm, they have an agricultural lien on the crops harvested for the reasonable value of the services they provided. As with other liens, the harvester's lien needs to be "perfected." In order to perfect a harvester's lien, the lienor needs to file a financing statement. The lien becomes capable of perfection when the services are rendered. So in theory, the moment you have provided harvesting services for a farmer, you have a lien capable of perfection for the reasonable amount of the services provided.

If you are a farmer and do not know whether you will get paid or not, you only have 10 days during which you must perfect your harvester's lien. So, even if you think the person on whose farm you worked ("farmowner") will eventually pay you, it might behoove you to file a harvester's lien to protect your interest.

Moreover, a perfected lien protects your rights in the event the farmowner becomes insolvent after you worked for them but before you get paid. If you do work for the farmowner and he or she becomes insolvent, your rights might be foreclosed because your lien is not perfected. The same is true for the agricultural lienor. If you have an agricultural lien and do not "perfect," you are not necessarily entitled to anything in the event that the person against whom you have the lien becomes insolvent.

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