Opinion ID: 2131551
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Heading: Did the mechanic's lien attach to Iowa Realty's property?

Text: One furnishing labor or materials for any building or land for improvement thereof may be entitled to a lien by virtue of a contract with the owner, his agent, trustee, contractor, or subcontractor. See § 572.2, The Code. Certain principles apply when, as here, real estate is leased with an intention improvements will be made. Ordinarily, mere knowledge of or consent to the making of improvements by a lessee does not subject the interest of the lessor to a mechanic's lien. Cassaday v. DeJarnette, 251 Iowa 391, 393-394, 101 N.W.2d 21, 23 (1960); Perkins Supply & Fuel Serv. v. Rosenberg, 226 Iowa 27, 30, 282 N.W. 371, 373 (1938). But if the lessor has by express or implied agreement with his lessee contracted for the improvement of his real estate by the latter, it is generally held he has subjected his interest in the realty to the claim of a mechanic's lien for the reasonable value of labor and material furnished. This is particularly true where the lease is so drafted that buildings erected or improvements made become the property of lessor after a comparatively short term, or where the improvement creates an additional value included in computing the sums to be paid as rental. Knudson v. Bland, 253 Iowa 614, 618, 113 N.W.2d 242, 244 (1962); Denniston & Partridge Co. v. Romp, 244 Iowa 204, 208, 56 N.W.2d 601, 604 (1953); 57 C.J.S. Mechanics' Liens § 65(4)(a), at 562 (1948). In this situation, the lessee is considered to be the agent of the lessor within the meaning of § 572.2, The Code. Knudson v. Bland, supra; Denniston & Partridge Co. v. Romp, supra, 244 Iowa at 212, 56 N.W.2d at 605. In the case before us, a central lease feature was the provision for construction of the car-wash gasoline facility. It materially added to the value of the real estate. This improvement cost at least $50,000. The value of the vacant lot was $22,491. After this construction, the city assessor valued the property at $79,060. The improvements became the property of the lessor at once. We find the facility primarily responsible for the stipulated annual rental of $16,250. We hold trial court was correct in reaching its determination Stroh's lien attached to Iowa Realty's property. Nor are we dissuaded from this conclusion by the lease language relating to mechanic's liens. Queal Lumber Co. v. Lipman, 200 Iowa 1376, 206 N.W. 627 (1925), relied on by Iowa Realty, is distinguishable. There, a prior recorded lease disavowed the lessee's agency and specifically gave notice to potential lienholders they had no right to file liens. In this case, the lease was unrecorded. Furthermore, it at least recognized the validity of potential liens by requiring the lessee to cause such liens to be released within 30 days.