Thursday, March 15, 2012

Iowa Mechanics Lien 2011 Caselaw Roundup


In 2011, a few Iowa appellate decisions were decided involving Iowa mechanic’s liens. A synopsis of those holdings are below . 
American Disaster Serv. v. Wagner (Iowa App. 2011): The Contractor prevailed against a homeowner.
  • The district court enforced the contractor's mechanic’s lien regarding work performed to remedy fire damage to a house. The court rejected the owner’s lack of substantial performance argument, holding that the contractor had completed 70% of the work, that all such work was completed in a workmanlike manner, and that the homeowner hindered and delayed the contractor’s performance.
  • The court found that the completion work performed by a second contractor after the termination of the original contractor was “extreme remodeling” work that 1) was not part of the original scope of work and 2) was not unnecessary for repairs to the fire damage.

Kiefer Const. v. Farrell (Iowa App. 2011): Mechanics Lien partially enforced by Iowa Court.
  • In this matter, the appellate court enforced a mechanic’s lien in part.  The mechanics lien was filed by a contractor regarding certain work performed regarding an addition built on a house as well as basement work.
  • The owner put forth an argument that the project lacked substantial completion, and that therefore a lien filing was impermissible. The court, however, rejected that argument holding that the contractor had substantially completed the work and therefore was entitled to recover the full contract price of his work, minus deductions for defects or incompletion.
  • However, court rejected the contractor’s argument that he should be paid the full contract price even though the contractor was denied access to the property to repair the deficiencies.  The court found that the homeowner had given the contractor access to repair the work, but only denied him access when the remedy work was inadequate.
  • The owner's counterclaim for damages was rejected.  The counterclaim related to alleged deficiencies with the basement depth. The owner had confirmed with the contractor the depth of the basement, despite being told about the low water table. Resulting water damage issues could not therefore be asserted.  Additionally, the alleged water damage issues stemmed from a sump pump which was not supplied or installed by the contractor.

An interesting blog written by Davis, Brown, Koehn, Shors & Roberts, P.C. entitled 2011 Cases Involving Mechanic’s Liens provides "practice pointers" for each of these cases, which includes some interesting insight:


  • Describe, in great detail, the scope of work in your written contract.
  • Remediation work can be problematic when homeowners may want additional work beyond actual remediation work. Make sure all parties are on the same page regarding scope of work.
    • Deductions will be made by the court from the full contract price to account for work not performed or deficiency performed work.
    • The safest route is to clearly document times when a homeowner is advising you to proceed against your recommended course of action and in spite of risks.
  

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