Bill Text: IA SF2236 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act relating to mechanics’ liens, public construction liens, and the early release of retained funds. (Formerly SSB 3039.)
Spectrum: Committee Bill
Status: (Introduced - Dead) 2018-03-27 - Withdrawn. S.J. 784. [SF2236 Detail]
Download: Iowa-2017-SF2236-Introduced.html
Senate File 2236 - Introduced SENATE FILE BY COMMITTEE ON JUDICIARY (SUCCESSOR TO SSB 3039) A BILL FOR 1 An Act relating to mechanics' liens, public construction liens, 2 and the early release of retained funds. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 5704SV (2) 87 asf/jh PAG LIN 1 1 Section 1. Section 26.3, subsection 3, Code 2018, is amended 1 2 to read as follows: 1 3 3. Sections 26.4 through26.1326.12 apply to all 1 4 competitive bidding pursuant to this section. 1 5 Sec. 2. Section 314.1, subsection 2, Code 2018, is amended 1 6 to read as follows: 1 7 2. Notwithstanding any other provision of law to the 1 8 contrary, a public improvement that involves the construction, 1 9 reconstruction, or improvement of a highway, bridge, or culvert 1 10 and that has a cost in excess of the applicable threshold 1 11 in section 73A.18, 262.34, 297.7, 309.40, 310.14, or 313.10, 1 12 as modified by the bid threshold subcommittee pursuant to 1 13 section 314.1B, shall be advertised and let for bid, except 1 14 such public improvements that involve emergency work pursuant 1 15 to section 309.40A, 313.10, or 384.103, subsection 2. For a 1 16 city having a population of fifty thousand or less, a public 1 17 improvement that involves the construction, reconstruction, or 1 18 improvement of a highway, bridge, or culvert that has a cost 1 19 in excess of twenty=five thousand dollars, as modified by the 1 20 bid threshold subcommittee pursuant to section 314.1B, shall be 1 21 advertised and let for bid, excluding emergency work. However, 1 22 a public improvement that has an estimated total cost to a 1 23 city in excess of a threshold of fifty thousand dollars, as 1 24 modified by the bid threshold subcommittee pursuant to section 1 25 314.1B, and that involves the construction, reconstruction, or 1 26 improvement of a highway, bridge, or culvert that is under the 1 27 jurisdiction of a city with a population of more than fifty 1 28 thousand, shall be advertised and let for bid. Cities required 1 29 to competitively bid highway, bridge, or culvert work shall 1 30 do so in compliance with the contract letting procedures of 1 31 sections 26.3 through26.1326.12. 1 32 Sec. 3. Section 572.26, Code 2018, is amended to read as 1 33 follows: 1 34 572.26 Kinds of action ==== amendment. 1 35 1. An action to enforce a mechanic's lien shall be by 2 1 equitable proceedings, and no other cause of action shall be 2 2 joined therewith. 2 3 2. a.Any lien statement may be amended by leave of court 2 4 in furtherance of justice, except as to the amount demanded 2 5Except as provided in paragraph "b", a claimant may only amend a 2 6 lien statement by leave of court in furtherance of justice. 2 7 b. A lien statement may be amended without leave of court 2 8 to decrease the amount demanded, and such amendment shall be 2 9 effected through the mechanics' notice and lien registry. 2 10 Amendment of a lien statement pursuant to this subparagraph 2 11 shall not change or otherwise affect its priority. 2 12 c. A lien statement shall not be amended to increase the 2 13 amount demanded. 2 14 Sec. 4. Section 573.15, Code 2018, is amended by striking 2 15 the section and inserting in lieu thereof the following: 2 16 573.15 Exception. 2 17 A person, firm, or corporation that has performed labor 2 18 for or furnished materials, service, or transportation to 2 19 a subcontractor shall not be entitled to a claim against 2 20 the retainage or bond under this chapter unless the person, 2 21 firm, or corporation that performed the labor or furnished 2 22 the materials, service, or transportation does all of the 2 23 following: 2 24 1. Notifies the principal contractor in writing with a 2 25 one=time notice containing the name, mailing address, and 2 26 telephone number of the person, firm, or corporation that 2 27 performed the labor or furnished the materials, service, 2 28 or transportation, and the name of the subcontractor for 2 29 whom the labor was performed or the materials, service, or 2 30 transportation were furnished, within thirty days of first 2 31 performing the labor or furnishing the materials, service, or 2 32 transportation for which a claim may be made. Additional labor 2 33 performed or materials, service, or transportation furnished by 2 34 the same person, firm, or corporation to the same subcontractor 2 35 for use in the same construction project shall be covered by 3 1 this notice. 3 2 2. Supports the claim with a certified statement that 3 3 the principal contractor received the notice described in 3 4 subsection 1. 3 5 Sec. 5. NEW SECTION. 573.28 Early release of retained 3 6 funds. 3 7 1. For purposes of this section: 3 8 a. "Authorized contract representative" means the person 3 9 chosen by the governmental entity or the department to 3 10 represent its interests or the person designated in the 3 11 contract as the party representing the governmental entity's 3 12 or the department's interest regarding administration and 3 13 oversight of the project. 3 14 b. "Department" means the state department of 3 15 transportation. 3 16 c. "Governmental entity" means the state, political 3 17 subdivisions of the state, public school corporations, and all 3 18 officers, boards, or commissions empowered by law to enter 3 19 into contracts for the construction of public improvements, 3 20 excluding the state board of regents and the department. 3 21 d. "Public improvement" means a building or construction 3 22 work which is constructed under the control of a governmental 3 23 entity and is paid for in whole or in part with funds of the 3 24 governmental entity, including a building or improvement 3 25 constructed or operated jointly with any other public or 3 26 private agency, but excluding urban renewal demolition and 3 27 low=rent housing projects, industrial aid projects authorized 3 28 under chapter 419, emergency work or repair or maintenance 3 29 work performed by employees of a governmental entity, and 3 30 excluding a highway, bridge, or culvert project, and excluding 3 31 construction or repair or maintenance work performed for a city 3 32 utility under chapter 388 by its employees or performed for a 3 33 rural water district under chapter 357A by its employees. 3 34 e. "Repair or maintenance work" means the preservation of a 3 35 building, storm sewer, sanitary sewer, or other public facility 4 1 or structure so that it remains in sound or proper condition, 4 2 including minor replacements and additions as necessary to 4 3 restore the public facility or structure to its original 4 4 condition with the same design. 4 5 f. "Substantially completed" means the first date on which 4 6 any of the following occurs: 4 7 (1) Completion of the public improvement project or the 4 8 highway, bridge, or culvert project or when the work on the 4 9 public improvement or the highway, bridge, or culvert project 4 10 has been substantially completed in general accordance with the 4 11 terms and provisions of the contract. 4 12 (2) The work on the public improvement or on the designated 4 13 portion is substantially completed in general accordance with 4 14 the terms of the contract so that the governmental entity or 4 15 the department can occupy or utilize the public improvement or 4 16 designated portion of the public improvement for its intended 4 17 purpose. This subparagraph shall not apply to highway, bridge, 4 18 or culvert projects. 4 19 (3) The public improvement project or the highway, bridge, 4 20 or culvert project is certified as having been substantially 4 21 completed by either of the following: 4 22 (a) The architect or engineer authorized to make such 4 23 certification. 4 24 (b) The authorized contract representative. 4 25 (4) The governmental entity or the department is occupying 4 26 or utilizing the public improvement for its intended purpose. 4 27 This subparagraph shall not apply to highway, bridge, or 4 28 culvert projects. 4 29 2. Payments made by a governmental entity or the department 4 30 for the construction of public improvements and highway, 4 31 bridge, or culvert projects shall be made in accordance with 4 32 the provisions of this chapter, except as provided in this 4 33 section: 4 34 a. At any time after all or any part of the work on the 4 35 public improvement or highway, bridge, or culvert project is 5 1 substantially completed, the contractor may request the release 5 2 of all or part of the retained funds owed. The request shall be 5 3 accompanied by a sworn statement of the contractor that, ten 5 4 calendar days prior to filing the request, notice was given as 5 5 required by paragraphs "f" and "g" to all known subcontractors, 5 6 sub=subcontractors, and suppliers. 5 7 b. Except as provided under paragraph "c", upon receipt of 5 8 the request, the governmental entity or the department shall 5 9 release all or part of the retained funds. Retained funds that 5 10 are approved as payable shall be paid at the time of the next 5 11 monthly payment or within thirty days, whichever is sooner. If 5 12 partial retained funds are released pursuant to a contractor's 5 13 request, no retained funds shall be subsequently held based 5 14 on that portion of the work. If within thirty days of when 5 15 payment becomes due the governmental entity or the department 5 16 does not release the retained funds due, interest shall accrue 5 17 on the amount of retained funds at the rate of interest that is 5 18 calculated as the prime rate plus one percent per year as of 5 19 the day interest begins to accrue until the amount is paid. 5 20 c. If labor and materials are yet to be provided at the 5 21 time the request for the release of the retained funds is made, 5 22 an amount equal to two hundred percent of the value of the 5 23 labor or materials yet to be provided, as determined by the 5 24 governmental entity's or the department's authorized contract 5 25 representative, may be withheld until such labor or materials 5 26 are provided. 5 27 d. An itemization of the labor or materials yet to be 5 28 provided, or the reason that the request for release of 5 29 retained funds is denied, shall be provided to the contractor 5 30 in writing within thirty calendar days of the receipt of the 5 31 request for release of retained funds. 5 32 e. The contractor shall release retained funds to the 5 33 subcontractor or subcontractors in the same manner as retained 5 34 funds are released to the contractor by the governmental entity 5 35 or the department. Each subcontractor shall pass through to 6 1 each lower=tier subcontractor all retained fund payments from 6 2 the contractor. 6 3 f. Prior to applying for release of retained funds, the 6 4 contractor shall send a notice to all known subcontractors, 6 5 sub=subcontractors, and suppliers that provided labor or 6 6 materials for the public improvement project or the highway, 6 7 bridge, or culvert project. 6 8 g. The notice shall be substantially similar to the 6 9 following: 6 10 NOTICE OF CONTRACTOR'S REQUEST 6 11 FOR EARLY RELEASE OF RETAINED FUNDS 6 12 You are hereby notified that [name of contractor] will be 6 13 requesting an early release of funds on a public improvement 6 14 project or a highway, bridge, or culvert project designated as 6 15 [name of project] for which you have or may have provided labor 6 16 or materials. The request will be made pursuant to Iowa Code 6 17 section 573.28. The request may be filed with the [name of 6 18 governmental entity or department] after ten calendar days from 6 19 the date of this notice. The purpose of the request is to have 6 20 [name of governmental entity or department] release and pay 6 21 funds for all work that has been performed and charged to [name 6 22 of governmental entity or department] as of the date of this 6 23 notice. This notice is provided in accordance with Iowa Code 6 24 section 573.28. 6 25 Sec. 6. REPEAL. Section 26.13, Code 2018, is repealed. 6 26 EXPLANATION 6 27 The inclusion of this explanation does not constitute agreement with 6 28 the explanation's substance by the members of the general assembly. 6 29 This bill relates to mechanics' liens and public 6 30 construction liens. 6 31 MECHANIC'S LIENS. Under current law, a lien statement may 6 32 only be amended by leave of court in furtherance of justice 6 33 or as to the amount demanded. The bill provides that a 6 34 claimant may only amend a lien statement by leave of court in 6 35 furtherance of justice or to decrease the amount demanded. An 7 1 amendment to decrease the amount demanded must be accomplished 7 2 through the mechanics' notice and lien registry. The bill 7 3 provides that amending a lien statement to decrease the amount 7 4 demanded does not affect the priority of the lien statement. 7 5 The bill also provides that a lien statement shall not be 7 6 amended to increase the amount demanded. 7 7 PUBLIC CONSTRUCTION LIENS. Current Code section 573.15 7 8 provides an exception to the requirement that a public 7 9 corporation retain a portion of funds due a contractor on a 7 10 public improvement project in a fund for the payment of claims 7 11 for materials furnished and labor performed. The exception 7 12 provides that a public corporation need only retain funds due a 7 13 supplier of material to a general contractor if the supplier 7 14 provides the general contractor with one of two permitted types 7 15 of notice after the materials are supplied. The bill provides 7 16 that, in addition to claims for materials, the exception shall 7 17 apply to claims for labor, service, or transportation. The 7 18 bill also amends the notice requirement to provide that a 7 19 supplier of labor, materials, service, or transportation to a 7 20 general contractor must give only one type of notice, along 7 21 with a certified statement that such notice was given. 7 22 The bill repeals Code section 26.13 (public construction 7 23 bidding ==== early release of retained funds), creates new Code 7 24 section 573.28 with the same language except for corrected 7 25 internal references, and provides that the Code section no 7 26 longer applies to all competitive bidding done pursuant to Code 7 27 section 26.3 or 314.1. LSB 5704SV (2) 87 asf/jh
