HF 309 codifies current practice that prohibits a person from preparing, issuing, requesting or requiring a “certificate of insurance” that contains false or misleading information about the policy or purports to affirmatively or negatively amend, extend or alter the policy’s coverage. A “certificate of insurance” is a document or instrument, regardless of how it is titled or described, by an insurance company that is evidence of property and causality insurance coverage. A certificate does not include a policy, insurance binder, policy endorsement or automobile insurance identification or information card.
A certificate does not warrant that the insurance policy referenced in a certificate complies with the insurance or indemnification requirements of a contract, and the inclusion of a contract number or description in a certificate cannot be interpreted as warranting compliance. A person is entitled to notice of cancellation, non-renewal or material changes in an insurance policy or any other similar notice concerning the policy only if the person has such rights under the terms of the policy or the policy endorsement. A certificate cannot alter those rights.
The Iowa Insurance Commissioner may examine and investigate anyone they reasonably believe violates the bill. Enforcement may include cease and desist orders and a $500 penalty per violation. The Commissioner may adopt rules to administer the bill, which takes effect upon enactment and applies to certificates of insurance prepared, issued, requested or required beginning 90 days after the effective date.
HF 586 is based on a recommendation by the Iowa Finance Authority (IFA). It revises antiquated language concerning bonds and notes that requires a copy of each agreement be filed with the Secretary of State to be valid. A pledge made in respect of bonds or notes will be valid and binding from the time the pledge is made; and the resolution, trust agreement or any other instrument by which a pledge is created does not need to be recorded or filed to be valid, binding or effective. It also eliminates a requirement that IFA award grants from the shelter assistance fund on an annual basis. The bill requires IFA to establish and administer a rent subsidy program to help approved participants under a home and community-based services Medicaid waiver and to approve participants in the federal “money follows the person” grant program under the medical assistance program. The bill adds “an owner-builder” who has contracted or will contract with a subcontractor to provide labor or furnish material for the property to those who must post a notice on the Mechanics’ Notice and Lien Registry no later than 10 days after work begins.
This language was proposed after IFA, the Iowa Bankers Association, Iowa Credit Union League, Real Estate Section of the Iowa State Bar Association, Iowa Association of Realtors and the Iowa Land Title Association worked to restore the intent of the 2012 mechanics’ lien changes in light of an Iowa Court of Appeals case in 2016. It ruled that because of the grammatical construction of the statute, only general contractors who use subcontractors must post a notice with the Secretary of State as a prerequisite to filing a mechanics’ lien on residential property.
This bill allows a general contractor to post a notice with the Secretary of State within 10 days of beginning work regardless of whether they are using subcontractors so that real estate professionals can see if any unpaid work is due to the contractor before closing. This would be a prerequisite to filing a lien, and restores the statute to the intent of the 2012 legislation. It is important for transparency to lenders, attorneys, closers, abstractors and realtors to make sure contractors and subcontractors receive payment prior to closing a loan and clear title is preserved for the new homeowner. Associated Builders & Contractors of Iowa and other proponents say failure to make this change puts homebuyers at risk of bearing the cost of a sellers’ repair if no notice is posted and a lien is later filed by a contractor within 90 days of doing the work, which often occurs after the closing if the repair is done pursuant to a home inspection of a pending sale. This lien without any notice provision would likely be undetectable by lenders, closing attorneys and abstractors, and the new homeowner would probably pay the cost if not found before closing. The bill passed the House 99-0.
[3/30: 46-0 (Anderson, Bertrand, D. Johnson, Kapucian excused)]