Iowa law contains numerous statutory liens. One of those statutory liens – the mechanic’s lien - was at issue in this case where the Iowa Court of Appeals was faced with the question of whether a contractor or a bank that financed the building project at issue had priority as to payment.
Under the facts of the case, a building owner defaulted on payments to his mortgage lender (the local bank) and the contractor he had hired for a building remodeling project. The contractor filed a mechanics lien. At trial, the bank and the contractor asked the court to resolve the dispute over who should have priority to payment. The bank argued that its purchase-money mortgage was secured first and should enjoy priority. The bank cited Iowa Code 572.18(2) which provides that “construction mortgage liens shall be preferred to all mechanic’s liens of claimants who commenced their particular work or improvement subsequent to the date of the recording of the construction mortgage lien.” Here, the contractor did not commence work until after the recording of the bank’s lien. That was the key to the case.
The trial court ruled for the bank and the contractor appealed. With little discussion, the appellate court agreed with the “thorough and well-written discussion” of the trial court and affirmed. Acterra Group, Inc. v. Iowa State Savings Bank, No. 0-364/ 09-1776, 2010 Iowa App. LEXIS 561 (Iowa Court App., Jun. 16, 2010).