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.

Mechanic's liens in five paragraphs.

I must note that the entirety of the law of mechanic's liens cannot be summarized in five paragraphs. This is just a primer on the law of mechanic's liens -- in Iowa -- although general principles of lien law typically translate across a multitude of jurisdictions. There are a number of requirements in order to file and enforce a mechanic's lien, and the specifics differ among jurisdictions. You are entitled to file a mechanic's lien if you provided labor or material for, or performed labor on any structure on a given parcel.

In Iowa, a builder-owner or general contractor must post notice of commencement of work within 10 days of beginning work in order to properly file and enforce a mechanic's lien. The notice is only effective as to work and material provided after it is posted. If you are a subcontractor and the owner or general contractor failed to post such notice, you can cure the defect by posting it in conjunction with the preliminary notice that is required to be posted of all subcontractors.

If you have successfully navigated the preliminary requirements and are able to file a mechanic's lien, the person against whom you filed the lien can provide written demand for you to bring suit to foreclose the lien within 30 days. If you do not bring suit to foreclose the lien within 30 days, then the lien is forfeited.

If written demand to foreclose the lien is not provided, you do not have unlimited time to enforce it. You have two years plus ninety days from the last date on which labor or material was provided to foreclose the lien. Additionally, you will need to "perfect" the lien before you can foreclose.

If collateral is provided as security before work is complete, you cannot file a mechanic's lien. If security is provided after work is complete, you can still file a mechanic's lien. As you can see, there are nuances in the law of mechanic's liens, and these examples are illustrative, not exhaustive. If you do not do it right, you may end up forfeiting your right to file and foreclose the lien.

 

Navigating the new mechanic's lien requirements in Iowa.

As discussed in other posts, the State of Iowa imposed new requirements for obtaining and enforcing a mechanic's lien in 2013. These new requirements went into effect at the beginning of 2013. There are different requirements for residential and commercial construction. For residential construction, you have to post notice of commencement of work within 10 days to the secretary of state's website. You also have to furnish the homeowner with the following notice in 10-point font or larger:

"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."

Additionally, the contractor must provide the website address for the Mechanic's Notice and Lien Registry (MNLR), so the owner can see who has lien rights on their property in connection with a particular project. Then, if the homeowner does not pay, they know who can file a lien against them. The notice must also provide the toll-free number for the MNLR: 888-767-8683.

Here is the fee schedule for filing to the MNLR in Iowa. The process is slightly different for commercial work. The general contractor must provide to the owner (or the subcontractor to the general contractor) in writing a notice within 30 days of first beginning work with the general contractor's contact information. When you provide this notice, you should make a copy of it just before sending, because it will help support your lien claim in the event you end up in litigation.

For reference, here is the new mechanic's lien form for residential construction. Here is the new mechanic's lien form for commercial construction.

Substantial confusion over new mechanic's lien procedures in Iowa.

As discussed in other posts, mechanic's lien law has many requirements. In Iowa, some of these requirements changed in 2013. For one, mechanic's liens are no longer filed with the district court in which the work occurred. It has come to my realization there is substantial confusion among contractors over the new procedures. There is more opportunity to get things wrong with the new procedures. There are procedures that must be followed before a dispute ever arises to properly obtain and enforce a mechanic's lien. If you do not get it right, you could be out of luck. If you are in a business that regularly or occasionally deals with mechanic's liens, it behooves you to understand the new procedures.

Improving your chance of success in foreclosing a mechanic's lien.

The lien foreclosure process begins before a dispute arises. If you begin protecting your rights before a dispute arises, it can go a long way toward improving your chances of successfully foreclosing a lien. If you are engaged in structural, mechanical, electrical or plumbing construction or improvements, you probably have either filed or thought about filing a mechanic's lien. There are a number of requirements for filing and enforcing a mechanic's lien. But there are things you can do before a dispute arises to make the process easier.

First, when you begin a project, provide the proper notice of commencement of work with the Secretary of State. Second, if possible, take pictures of exactly what is covered in your scope of work, before you begin working. When the project is complete, take pictures of what you did. Now, if you did it wrong or poorly this can come back to bite you. But if you adhered to industry best practices and the contract's scope of work, it will go a long way toward proving that you are owed the amount you are claiming in the lien. A mechanic's lien is not like a contract. You do not need to prove a contractual breach. You only need to prove that you did work and did not get paid.

Third, keep a journal of the days you worked on the project, the time you spent each day, and what you did each day. This will provide more credibility when you are testifying in a lien foreclosure proceeding about what you provided.

Liens revisited: Nonstatutory and artisan's liens.

In addition to mechanic's liens, agricultural and harvester's liens, there are a few other liens worth mentioning: nonstatutory and artisan's liens. The liens I have discussed do not constitute an exhaustive list. But mechanic's liens are the most common, and most attorneys will never encounter the others in practice. It does not hurt to know what unconventional remedies may be out there for you.

A nonstatutory lien is a common law lien. Ironically, nonstatutory liens are generally provided in a statute. If you think you have lien rights but the facts do not fit within another lien type, you can file a nonstatutory lien. You would file in district court, and then there would be a hearing to determine the lien's validity. If valid, you would then file the lien with the county recorder, which would effectively "perfect" the lien.

If you worked on personal property (movable property) and did not get paid, you can file an artisan's lien. Mechanic's liens attach to buildings on property. Artisan's liens attach to personal property. To enforce an artisan's lien, you would need to have possession of the personal property, and you cannot commit a trespass to obtain possession of the personal property.

There are notice requirements, but if you follow those you would be able to sell the personal property on commercially reasonable terms. You would also only be able to sell items to repay the amount owed. If you are owed $2K and there are multiple items involved, you cannot sell more than $2K. You are only entitled to the amount you are owed. It is important to stress that if you do not follow the notice provisions, you would be in big trouble and possibly liable for conversion.

If this sounds too onerous, you could likely sue for breach of contract. Even when it does not involve liens or a breach of contract, if you have been wronged, there probably are multiple legal processes you can use to obtain payment.

Liens versus breach of contract.

The last few days I wrote about about liens. If you hold a mechanic's lien, agricultural lien or harvester's lien, there are likely other methods of obtaining payment from someone who is wrongfully withholding it. You may be able to file a claim for breach of contract or quantum meruit. To file a breach of contract claim, there must be an express or implied contract. In cases where you perform work that entitles you file a lien, you may also be able to file a claim for breach of contract. If you do not have a written contract, it would be more difficult to prove the existence of an implied contract and its breach, as opposed to the value of the services you provided.

Quantum meruit is a legal term simply meaning that if you do not have a contract but provided a benefit to another, you can recover the reasonable value of the services provided. You are able to recover the same amount as with a lien -- the reasonable value of the services provided -- but the recovery does not attach to property like a lien.

These rights are not mutually exclusive. It may be prudent to file a lien, breach of contract claim, and for quantum meruit. Generally, the legal procedure of bringing all three claims can be a bit complicated. First, you have to file the lien, perfect it, and file a petition to foreclose it. Depending on the jurisdiction in which you live, you may not be able to bring any claims along with the petition to foreclose the lien. Second, you would file a petition for breach of contract and quantum meruit. Third, you would file a motion to consolidate the cases, which would likely be granted. If your jurisdiction allows you to include other claims in a petition to foreclose a lien, then you could include all three claims in one petition.

Sometimes it may not be prudent to assert all three rights of action. If you have a contract worth $50K but reasonably performed only $20K worth of work, you could stand to make more money by claiming breach of contract. If you have a contract worth $50K, but the reasonable value of the services you provided was $75K, you could make more money by filing a lien.

If you clearly have a contract, you would not likely have a strong case for quantum meruit. That remedy is available when there is no contract. In the last example, the opposing party would likely assert a counterclaim for breach of contract, so the opposing party would attempt to limit your recovery to $50K. It would be a fairly difficult case requiring a lot of evidence and testimony regarding the amount you should recover: $50K, $75K, or nothing. But those are just some considerations you should make if you performed work but did not get paid.