USA – IOWA Law and Practice Contributed by: David M. Erickson, Christopher S. Talcott, Amy S. Montgomery and Shannon M.H. Hasse, Dentons Davis Brown PC
vided in the construction agreement. Contrac - tors will often provide express limited warran - ties (usually of one to two years in length) and some may otherwise attempt to have the owner waive all other warranties, implied or express. Contractors will often additionally affirmatively disclaim any knowledge of certain aspects of the construction (eg, soil composition on the con - struction site). However, Iowa courts have long held that all construction contracts are subject to an implied warranty of workmanlike construction. In certain circumstances, a construction contract may also be subject to the implied warranty for a particular purpose. 7.4 Management of Schedule-Related Risk Timing and deadlines are important aspects of construction agreements, with contractors gen - erally attempting to remove any firm deadlines from the construction agreement, and owners generally attempting to include more firm dead - lines along with a per diem liquidated damages amount to be imposed for a contractor not meet - ing the deadlines. An important caveat is that certain contractors will include milestone billing in their agreements. To the extent that the con - tract includes deadlines, however, damages will generally be recoverable by owners and con - tractors in the event of delay, unless the contract includes a provision for no damages upon delay. Additionally, there are numerous exceptions to enforcement of delay damages. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance There are numerous additional forms of security that an owner may require to guarantee a con - tractor’s performance. Generally, these addition - al forms of security are not negotiated in residen -
tial construction agreements. However, in larger commercial transactions, and in construction agreements involving a state, county or munici - pality as the owner, owners generally require the contractors to obtain payment and performance bonds, and, at times, maintenance bonds. In some real estate development settings, the more prevalent method is through a requirement that the developer provides a letter of credit from a financial institution for the amount of the improvements. 7.6 Liens or Encumbrances in the Event of Non-Payment For non-public projects, Iowa has a mechanics’ lien statute which permits a lien in favour of a contractor or subcontractor who furnishes any material or labour for the improvement, alteration or repair of any building and/or land. Generally, a properly perfected mechanic’s lien is superior to all other liens upon the building or land, except those liens recorded prior to the original com - mencement of the contractor’s work. However, liens resulting from construction mortgages are superior to all mechanics’ liens of claimants who commenced their particular work or improve - ment subsequent to the date of the recording of the construction mortgage lien. For public projects, subcontractors have the right to file claims against the retainage held by the public entity under Iowa Code Chapter 573, as well as claims against the payment bond. 7.7 Requirements Before Use or Inhabitation Iowa law requires that a certificate of occupancy be issued prior to construction being used or inhabited. The state statute delegates issuance of certificates of occupancy to the particular governmental subdivisions within the state. The
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