Last fall, we fielded a number of calls at the Center from Iowa landlords whose tenants failed to make their rental payments on time. In most of these cases, the tenant was offered the right to make the yearly payment in two installments, one at the beginning of the lease term and the other six months later. It was the September payments these tenants failed to make, and the landlords were wondering about their legal rights. In some cases, their rights were minimal because they had failed to perfect a landlord's lien.
The next several weeks present an open window during which landlords can protect their rights in the unfortunate event their tenants default. After March 20, this window closes.
Iowa Code § 570.1 provides that a landlord shall have a lien for the rent upon all crops grown upon the leased premises. This means that a lien automatically attaches to the farm products grown on the property. The landlord has a lien. This does not mean, however, that the lien is perfected. Only a perfected landlord's lien is prioritized ahead of other creditors.
In order to perfect a lien in farm products (making it enforceable as against other creditors), a landlord must file a financing statement with the Iowa Secretary of State. This is required by Iowa Code §554.9308(2).
Unperfected liens have little value.Perfected liens, however, are powerful. A perfected landlord’s lien puts the landlord in a position better than that of many other earlier perfected creditors, such as an agricultural supply dealer or a bank with an operating loan.
To perfect a landlord’s lien, a landlord must take the following steps:
Although a perfected lien does not guarantee that a landlord will recover his payment due (bankruptcy, for example, can throw a wrench into the recovery), it does provide the maximum legal protection available. And at $10 (the cost of filing the UCC-1), that's a pretty wise investment.
CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.