UPDATES & ANALYSIS

2.11

Homesteads exempt from mechanic’s lien foreclosure to collect legal fees, Iowa Supreme Court rules

by Rox Laird | February 11, 2020

Homeowners may have to pay a contractor for labor and materials in a mechanic’s lien foreclosure, but they cannot be forced to forfeit their homestead to cover the contractor’s legal fees, the Iowa Supreme Court ruled. That is, however, unless the homesteader waits too long to make that claim.

That was the good-news, bad-news result for a Des Moines couple who waged a legal battle for more than three years over a contractor’s $5,400 bill, which generated $58,000 in legal fees for the contractor.

The Supreme Court, in a unanimous ruling in Standard Water Controls v. Jones handed down Feb. 7, held that while a contractor who files a lien to collect for materials and services may be awarded reasonable attorney fees, those fees cannot be recouped from the sale of a homestead. The ruling did not help plaintiffs Michael and Cori Jones, however, as the Court ruled that their claim for homestead rights was asserted after the courts had already issued binding rulings in the case.

The Joneses disputed Standard Water Control’s $5,400 bill for a waterproofing project in the basement of their Des Moines home because workers broke sewer and water lines in the process, which had to be repaired by the Joneses. They waged a legal battle that included three trips to the Iowa Court of Appeals, which ultimately ruled in their favor on their homestead claim. Standard Water Control challenged that ruling in this appeal.

Justice Edward Mansfield, writing for the Court, used a metaphor from the insect world to characterize the Jones’ lengthy court battle: “Long-running litigation, like a species in the order lepidoptera, often goes through a metamorphosis,” he wrote. “The difference is that the final stage of a legal metamorphosis is not a butterfly. Rather, as here, it is frequently a battle over attorney fees.”

This battle was fought at the intersection of two Iowa statutes: Iowa Code Chapter 572, which says a plaintiff may be awarded attorney fees in a lien foreclosure action, and Chapter 561, which exempts the court-ordered sale of a homestead unless specifically allowed by statute.

Both code chapters involve longstanding legal rights in Iowa.

A mechanic’s lien statute has been on the books in some form since 1843, when Iowa was still a territory, Mansfield wrote, and homestead rights have a historic provenance, as well.

“Iowa has a long history of protecting the homestead,” Mansfield wrote. In 1854, the Court’s first case involving Iowa’s homestead statute, “we found a debtor was entitled to protect his home from sale under an 1849 statute protecting homesteads from ‘forced sale.’ Thus, less than three years after Iowa became a state, our legislature had already passed a statute protecting the homestead.”

The Iowa Supreme Court has “broadly and liberally” construed the homestead statute, which exists “to provide a margin of safety to the family, not only for the benefit of the family, but for the public welfare and social benefit which accrues to the State by having families secure in their homes.”

Iowa’s current homestead statute states that “the homestead of every person is exempt from judicial sale where there is no special declaration of statute to the contrary.” And the Legislature did not make such a “special declaration” in Section 572.32 providing for attorney fees in lien foreclosures.

“Accordingly,” Mansfield wrote, “we conclude the homestead exemption prohibits efforts to recover attorney fees in mechanic’s lien foreclosure actions. We do not believe we are extending to the debtors in this case a privilege ‘never contemplated or intended’ by the legislature.”

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