Court Opinion

ID: 6350779
Source: CourtListenerOpinion
Date Created: 2022-06-17 14:03:02.822776+00
Date Added: 2024-06-11T09:15:32.581593
License: Public Domain

IN THE SUPREME COURT OF IOWA

                                  No. 20–0972

                  Submitted March 24, 2022—Filed June 17, 2022

BORST BROTHERS CONSTRUCTION, INC.,

      Appellee,

vs.

FINANCE OF AMERICA COMMERCIAL, LLC

      Appellant.
___________________________________

FINANCE OF AMERICA COMMERCIAL, LLC,

      Appellant,

vs.

THOMAS DOSTAL DEVELOPERS, INC., and RANDY T. DOSTAL,

      Appellees,

and

KELLY CONCRETE COMPANY, INC., AFFORDABLE HEATING AND COOLING,
INC., 5 STAR PLUMBING, INC., and BORST BROTHERS CONSTRUCTION,
INC.,

      Appellees,
____________________________________

BORST BROTHERS CONSTRUCTION, INC.

      Appellee,

vs.

FINANCE OF AMERICA COMMERCIAL, LLC,

      Appellant.
___________________________________

FINANCE OF AMERICA COMMERCIAL, LLC,
      Appellee,
                                       2

vs.

THOMAS DOSTAL DEVELOPERS, INC., and RANDY T. DOSTAL,

       Appellants,

and

KELLY CONCRETE COMPANY, INC., DARNELL HOLDINGS, LLC d/b/a
DARNELL CONSTRUCTION, AFFORDABLE HEATING AND COOLING, INC., 5
STAR PLUMBING, INC., BORST BROTHERS CONSTRUCTION, INC., and KEN-
WAY EXCAVATING SERVICE, INC.,

       Appellees.

       On review from the Iowa Court of Appeals.

       Appeal from the Iowa District Court for Linn County, Mary E. Chicchelly,

Judge.

       A commercial lender seeks further review of a court of appeals decision

affirming the validity and superiority of certain mechanics’ liens. DECISION OF

COURT OF APPEALS AFFIRMED; DISTRICT COURT JUDGMENT AFFIRMED

IN    PART   AND     REVERSED    IN   PART    ON     APPEAL,   AFFIRMED    ON

CROSS-APPEAL.

       Mansfield, J., delivered the opinion of the court, in which Christensen,

C.J., and Appel and Waterman, JJ., joined. McDermott, J., filed a dissenting

opinion, in which McDonald and Oxley, JJ., joined.
                                      3

      John F. Fatino of Whitfield and Eddy, P.L.C., Des Moines, for appellant

Finance of America Commercial, LLC.

      Matthew L. Preston, Brad J. Brady, and David T. Meyers (until withdrawal)

of Brady Preston Gronlund PC, Cedar Rapids, for appellee Borst Brothers

Construction, Inc.

      S.P. DeVolder of The DeVolder Law Firm, P.L.L.C., Norwalk, for appellees

Thomas Dostal Developers, Inc. and Randy T. Dostal.

      William H. Roemerman of Elderkin & Pirnie, P.L.C., Cedar Rapids, for

appellee Kelly Concrete Co., Inc.
                                           4

MANSFIELD, Justice.

      I. Introduction.

      Since 2012, Iowa has used a centralized, internet-based registry for

mechanics’ liens. To assure the smooth functioning of this registry, and also

assure that homeowners and buyers are aware of the risk that such liens may

be placed on a property, general contractors and owner-builders are supposed

to post a notice of commencement of work to the central registry within ten days

of starting work on a residential construction project. If that doesn’t occur, a

subcontractor may nonetheless post the notice. Indeed, if no notice has already

been posted, a subcontractor must do so before posting a preliminary lien notice

and obtaining a mechanics’ lien.

      In this case, an owner-builder didn’t post notices of commencement on the

registry for five residential lots that it was developing. Accordingly, two

subcontractors did so, several months after the construction work had actually

begun. When the project went into default, a priority dispute arose between these

two subcontractors and the commercial lender for the project. The commercial

lender claimed that its previously recorded mortgages had priority; the

subcontractors argued that their mechanics’ liens came first. The district court

found in favor of the subcontractors, as did the court of appeals. We granted the

lender’s application for further review.

      We now agree with the courts below and conclude that the 2012 law didn’t

change the principle that mechanics’ liens will, in some circumstances, have

priority over previously recorded mortgages. We also conclude that the ten-day
                                         5

deadline for posting the notice of commencement to the registry applies to

general contractors and owner-builders but not to subcontractors. While the

statutory language in isolation is potentially ambiguous, context provides clarity.

It wouldn’t make sense to allow subcontractors to step in only if the general

contractor or owner-builder fails to post the notice of commencement within ten

days, while requiring subcontractors to meet the same ten-day deadline. Meeting

a missed deadline is impossible.

      For these reasons, we affirm the decision of the court of appeals and the

judgment of the district court on the questions of lien validity and priority in this

case. On the remaining appellate issues, we let the decision of the court of

appeals stand, although we modify its reasoning on one evidentiary point.

      II. Background Facts and Proceedings.

      A. Background Facts. This case concerns a residential property

development project in Cedar Rapids known as Hawks Point Seventh Addition.

Five of the thirty-two lots are at issue here: Lots 5, 6, 7, 8, and 10. Thomas Dostal

Developers, Inc. owned these properties and served as general contractor for

their development.

      In November and December 2017, Dostal Developers entered into five

commercial loans with Finance of America Commercial (FAC)—one loan for each

property. All five loans were memorialized by promissory notes, secured by
                                               6

mortgages, and secured also by guarantees signed by Randy Dostal.1 The

following table shows the amounts and dates of the five loans:

                     Lot Principal Documents                 Mortgage
                      # Amount ($)   Signed                  Recorded
                      5       153,000        11/10/17        11/13/17
                      6       141,750        11/10/17        11/13/17
                      7       149,250        11/10/17        11/13/17
                      8       170,250        11/10/17        11/13/17
                      10      153,000        12/20/17        12/20/17

By February 2018, Dostal Developers stopped making payments on these loans.

In August, FAC sent notices of default and acceleration. Dostal Developers did

not cure the defaults.

       Meanwhile, Dostal Developers had hired several subcontractors to work

on the properties, including Borst Brothers Construction and Kelly Concrete

Company. Borst put in sanitary and storm sewers, installed the water main,

created a temporary rock road, and graded the site. Borst’s work began on July

3, 2017, and ended on December 19, 2017. Kelly performed various concrete

jobs between September 2017 and January 15, 2018.

       Dostal Developers never posted a statutory “notice of commencement of

work” to the Iowa Mechanic’s Notice and Lien Registry (MNLR) to provide notice

of contracting with subcontractors. See Iowa Code § 572.13A(1) (2018). Instead,

       1Randy   Dostal was the president of Dostal Developers. He signed the guaranties for Lots
5, 6, 7, and 8 as “Randy T. Dostal.” The Lot 10 guaranty was signed “Thomas T. Dostal Dev.”
But the text of all the guaranties refers to “Randy T. Dostal” as the “Guarantor.”
                                               7

Kelly posted notices of commencement for four of the lots on February 1, 2018.2

Kelly also posted preliminary notices and mechanics’ liens that same day. See

id. §§ 572.8(1), .13A(2), .13B(1). The following day, February 2, Borst posted a

notice of commencement and a mechanics’ lien for all of the Hawks Point

properties it had performed work on.

       B. The Borst–Kelly Foreclosure Action. Neither Borst nor Kelly received

full payment for their work. On September 12, Borst filed a petition to foreclose

its mechanics’ lien in Linn County District Court, alleging Dostal Developers still

owed it $198,316.59 plus interest.3 Borst named other lien holders as parties,

including FAC and Kelly.

       Kelly filed an answer, cross-claim, and counterclaim on October 12. It

asserted that its mechanics’ liens had first-priority status and requested

foreclosure of those liens in the amount of $39,236.21 plus interest.

       On October 17, FAC moved to dismiss the claims of Borst and Kelly. As to

Borst, FAC asserted that it had not posted a timely notice of commencement of

work as required by Iowa Code section 572.13A(2) or a preliminary notice as

required by section 572.13B(4). Borst responded by posting its preliminary

notice on November 8. As to Kelly, FAC argued that if Kelly were a subcontractor,

it had not perfected its liens until February 1, 2018, and, therefore, they were

inferior to FAC’s mortgages as a matter of law.

       2Thedistrict court found that Kelly failed to file a notice of commencement for the work
performed on Lot 10.
       3Borst   later reduced its demand to $143,316.59.
                                        8

      C. The FAC Foreclosure Action. On November 26, the district court

denied FAC’s motions to dismiss in the Borst–Kelly lien foreclosure action to

allow for further development of the parties’ positions. By then, FAC had filed its

own petition to foreclose its mortgages in the Linn County District Court.

Therein, FAC alleged that its mortgages had priority over any mechanics’ liens of

Borst and Kelly. FAC also named Randy Dostal individually as a defendant,

asserting that he was personally liable as a guarantor of FAC’s loans. In total,

FAC claimed to be owed $827,983.52 plus interest. Early in 2019, the district

court consolidated the Borst–Kelly case and the FAC case.

      D. Summary Judgment and Trial in the Consolidated Proceedings. On

November 22, FAC moved for summary judgment in the consolidated case. FAC

once again argued that the mechanics’ lien holders had failed to post notices of

commencement within ten days of beginning work, rendering their liens invalid.

In the alternative, FAC maintained that all mechanics’ liens were junior and

inferior to its mortgages because the subcontractors’ notices of commencement

had not been posted until after FAC had recorded its mortgages. Kelly and Borst

resisted. The district court denied FAC’s summary judgment motion, and the

case proceeded to a bench trial on all issues, including FAC’s effort to enforce

Randy Dostal’s personal guaranties.

      At trial, FAC’s vice president of credit and implementation and

underwriting, Mark Thomas, testified. Through Thomas, FAC offered into

evidence letters addressed to Dostal Developers that detailed the current payoff

amounts for all five loans. FAC’s loan sub-servicer, BSI, had created these payoff
                                         9

statements per FAC’s request. Thomas testified that BSI regularly provided such

payoff statements whenever the borrower or the lender requested them. The

Dostal defendants objected to the admission of the payoff statements on the

ground that they were hearsay “clearly prepared for litigation purposes, not in

the regular course of business.” The district court overruled the objection and

allowed the payoff statements to come into evidence.

      Following trial, the district court entered a ruling that FAC, Borst, and

Kelly were all entitled to foreclose on their respective mortgages and liens against

Dostal Developers, with the exception of Kelly’s mechanics’ lien for Lot 10

because Kelly had failed to post a notice of commencement for that lot. The court

found that Borst’s and Kelly’s mechanics’ liens on the residential properties were

valid because the preliminary notices met the requirements for subcontractors

as set forth in Iowa Code section 572.13B. The court also rejected Dostal

Developers’ argument that FAC had failed to meet a contractual requirement that

it give notice before accelerating the balances due under the loans.

      Yet the district court found that Randy Dostal, despite having signed

personal guaranties, was not personally liable for amounts due on the FAC loans.

The court reasoned that there was “no evidence in the record to suggest that

Randy Dostal took any actions herein as an individual. Rather, all actions taken

by Randy Dostal, the Court finds, were done in his capacity on behalf of Dostal

Developers.”

      Turning to the question of priority, the district court determined that the

mechanics’ liens of Kelly and Borst had priority over FAC’s mortgages because
                                         10

Iowa Code section 572.18 gives a timely posted mechanics’ lien priority over “all

other liens” that are perfected subsequent to the beginning of the contractor’s

work. In the district court’s view, Kelly and Borst posted their mechanics’ liens

on time—i.e., within ninety days of finishing their work on the properties.

Therefore, their liens were superior to FAC’s mortgages that were recorded after

Kelly and Borst began their work. See Iowa Code § 572.18. As between Borst and

Kelly, Kelly had first priority because Kelly had posted its liens first. The district

court also awarded attorney fees to FAC, Borst, and Kelly as prevailing parties.

See id. § 572.32(1).

      E. The Decision of the Court of Appeals. FAC appealed, and the Dostal

defendants cross-appealed. FAC raised three issues on appeal, contending:

(1) the mechanics’ liens of Borst and Kelly were invalid and if not, their liens were

inferior to FAC’s mortgages; (2) Randy Dostal signed the guaranties in his

personal capacity and was personally liable; and (3) Borst and Kelly should not

have prevailed and were not entitled to attorney fees. The Dostal defendants

cross-appealed and raised three more issues: (1) the payoff statements used to

show the deficiency amounts were inadmissible hearsay and should not have

been received in evidence; (2) FAC should not have been allowed to foreclose

because it did not provide contractually prescribed notices of default and

acceleration; and (3) FAC should not have been awarded the full amount of

attorney fees it requested. We transferred the case to the court of appeals.

      The court of appeals reversed the district court on the issue of Randy

Dostal’s personal liability. The court explained,
                                       11

      Randy Dostal served as “Guarantor” on the loans made by FAC to
      Dostal Developers. “Thomas Dostal Developers Inc.” was defined as
      the “Borrower.” . . . Dostal signed four of the five agreements
      individually, and the fifth listed him as guarantor and was signed
      individually by [him as] Thomas [T.] Dostal. These signatures stand
      in stark contrast to the mortgage agreements, which Randy Dostal
      signed as president of Thomas Dostal Developers. The language and
      the signatures unambiguously establish Randy Dostal’s intent to
      serve as personal guarantor of the loans extended to Dostal
      Developers.

      On all other issues, the court of appeals affirmed the district court. The

court “[a]ssum[ed] without deciding” that the payoff statements did not fall

within the hearsay exception. Yet it rejected the Dostal parties’ appeal on this

point because it found that Thomas had “testified without objection to the figures

contained in the documents before the documents were offered or admitted.” It

found that the five notes could be accelerated by FAC without notice, and in any

event, FAC had provided notice.

      The court also determined that the mechanics’ liens of Borst and Kelly

were valid based on a “plain reading” of the statute. It reasoned that the statute

doesn’t expressly require subcontractors to post notices of commencement

within ten days as it does general contractors, and such a rule would be

impractical:

            Section 572.13A(1) requires the general contractor/owner-
      builder—not the subcontractor—to post a notice of commencement
      of work within ten days of the commencement of work. Section
      572.13A(2) allows a subcontractor to make the posting if the general
      contractor/owner-builder does not. . . .

            In terms of a subcontractor’s timing of notices, the
      subcontractor   might    not     know     whether     the    general
      contractor/owner-builder satisfied its obligation to post the notice
      of commencement of work until after the ten-day period set forth in
      section 572A.13A(1) expires. The subcontractor’s first opportunity
                                          12

      to post its notice of commencement would be on the eleventh day
      after commencement of work.

Further, based on Iowa Code section 572.18(1), the court of appeals found the

Borst and Kelly liens had priority over FAC’s mortgages.

      FAC and the Dostal parties sought further review of this decision, which

we granted. “On further review, we have the discretion to review all or some of

the issues raised on appeal or in the application for further review.”

Wermerskirchen v. Canadian Nat’l R.R., 955 N.W.2d 822, 827 (Iowa 2021)

(quoting State v. Roby, 951 N.W.2d 459, 463 (Iowa 2020)). Here, we choose to

review only two issues: (1) the validity and priority of the subcontractors’

mechanics’ liens, as to which FAC seeks further review; and (2) the evidentiary

ruling that admitted loan payoff statements as business records, as to which the

Dostal parties seek further review. The court of appeals decision shall stand as

the final decision on all other issues.

      III. Standard of Review.

      An action to enforce a mechanics’ lien is an action in equity. Iowa Code

§ 572.26(1). Equitable proceedings are reviewed de novo. Mlady v. Dougan, 967

N.W.2d 328, 332 (Iowa 2021); see also Iowa R. App. P. 6.907 (“Review in equity

cases shall be de novo.”). But “[w]e review questions of statutory interpretation

for correction of errors at law.” Mlady, 967 N.W.2d at 332 (quoting Standard

Water Control Sys., Inc. v. Jones, 938 N.W.2d 651, 656 (Iowa 2020)).

      We review evidentiary rulings on hearsay for errors at law. Buboltz v.

Birusingh, 962 N.W.2d 747, 757 (Iowa 2021).
                                        13

      IV. Analysis.

      A. Validity of the Borst and Kelly Mechanics’ Liens. FAC first contends

that Borst and Kelly don’t have valid liens because notices were not timely posted

on the MNLR website as required by Iowa Code sections 572.13A and 572.13B.

      1. Iowa Code section 572.13A. The first of these two provisions, section

572.13A, is titled “Notice of commencement of work — general contractor —

owner-builder.” Id. § 572.13A. Section 572.13A, subsection 1 requires a general

contractor or an owner-builder (such as Dostal Developers) who has contracted

or will contract with a subcontractor to post a notice to the MNLR website no

later than ten days after work begins and makes the notice effective only for work

completed after this posting. Specifically, this subsection states,

      Either a general contractor, or an owner-builder who has contracted
      or will contract with a subcontractor to provide labor or furnish
      material for the property, shall post a notice of commencement of
      work to the mechanics’ notice and lien registry internet site no later
      than ten days after the commencement of work on the property. A
      notice of commencement of work is effective only as to any labor,
      service, equipment, or material furnished to the property
      subsequent to the posting of the notice of commencement of work.

Id. § 572.13A(1). Next, this subsection identifies the information required to be

included in the posting. Id. § 572.13A(1)(a)–(g). However, a notice of

commencement of work does not contain information about particular

subcontractors. See id. It only indicates that a general contractor or

owner-builder either has hired a subcontractor or intends to hire one in the

future. See id.
                                         14

      In the following subsection—section 572.13A, subsection 2—the statute

expressly allows a subcontractor to post a notice of commencement in the event

that the general contractor fails to do so:

      If a general contractor or owner-builder fails to post the required
      notice of commencement of work to the mechanics’ notice and lien
      registry internet site pursuant to subsection 1, within ten days of
      commencement of the work on the property, a subcontractor may
      post the notice in conjunction with the posting of the required
      preliminary notice pursuant to section 572.13B. A notice of
      commencement of work must be posted to the mechanics’ notice
      and lien registry internet site before preliminary notices pursuant to
      section 572.13B may be posted.

Id. § 572.13A(2).

      Whoever posts a notice of commencement of work—whether a contractor,

an owner-builder, or a subcontractor—is required to provide written notice to

the owner of the property (if the owner is not an owner-builder). Id. § 572.13A(3).

Again, this notice provides no information about particular subcontractors. See

id. Its purpose, seemingly, is to provide general notice that there are (or will be)

subcontractors with potential lien rights working on the property. See id.

      The notice of commencement of work also results in the MNLR

administrator (i.e., the secretary of state) assigning an MNLR number to the

project. Id. § 572.13A(3)(a); see also id. § 572.1(1) (“ ‘Administrator’ means the

secretary of state.”).

      Finally, section 572.13A, subsection 4 states, “A general contractor who

fails to provide notice pursuant to this section is not entitled to a lien and remedy

provided by this chapter.” Id. § 572.13A(4). But only a general contractor’s
                                        15

noncompliance with this section forfeits the right to a lien—there is no mention

of subcontractors here. See id.

      2. Iowa Code section 572.13B. The next Code section, 572.13B, sets forth

the notice requirements for subcontractors like Borst and Kelly. It is titled

“Preliminary notice—subcontractor—residential construction.” Id. § 572.13B. It

states as follows:

            1. A subcontractor shall post a preliminary notice to the
      mechanics’ notice and lien registry internet site. A preliminary
      notice posted before the balance due is paid to the general contractor
      or the owner-builder is effective as to all labor, service, equipment,
      and material furnished to the property by the subcontractor. The
      preliminary notice shall contain all of the following information:

             ....

             b. The mechanics’ notice and lien registry number.

           c. The name, address, and telephone number of the
      subcontractor furnishing the labor, service, equipment, or material.

             ....

             2. At the time a preliminary notice is posted to the mechanics’
      notice and lien registry internet site, the administrator shall send
      notification to the owner, including the owner notice described in
      section 572.13, subsection 1, and shall post the mailing of the notice
      on the mechanics’ notice and lien registry internet site as prescribed
      by the administrator pursuant to rule. Notices under this section
      shall not be sent to owner-builders. Upon request, the administrator
      shall provide proof of service at no cost for the notice required under
      this section.

            3. a. A mechanic’s lien perfected under this chapter is
      enforceable only to the extent of the balance due the general
      contractor or the owner-builder at the time of the posting of the
      preliminary notice specified in subsection 1, and, except for
      residential construction property owned by an owner-builder, also
      is enforceable only to the extent of the balance due the general
      contractor at the time the owner actually receives the notice
      provided pursuant to subsection 2 or paragraph “b”.
                                         16

Id. § 572.13B(1)–(3).

      Some differences between section 572.13B and the preceding section are

noteworthy. First, unlike a notice of commencement of work, a preliminary notice

can sweep backward: “A preliminary notice posted before the balance due is paid

to the general contractor or the owner-builder is effective as to all labor, service,

equipment, and material furnished to the property by the subcontractor.” Id.

§ 572.13B(1). Second, the preliminary notice requires different content. It must

include the MNLR number for the project that the administrator assigned when

the notice of commencement of work was filed. Id. § 572.13B(1)(b). And it must

include information about the subcontractor. Id. § 572.13B(1)(c). Third, a

subcontractor’s mechanics’ lien is only enforceable “to the extent of the balance

due the general contractor or the owner-builder” at the time the preliminary

notice was posted. Id. § 572.13B(3)(a). So to that extent, the preliminary notice

doesn’t sweep backward.

      If the requirements of Iowa Code section 572.13B are not followed, that

subcontractor is not entitled to a lien. Id. § 572.13B(4) (“A subcontractor who

fails to post a preliminary notice pursuant to this section shall not be entitled to

a lien and remedy provided under this chapter.”).

      Both section 572.13A and section 572.13B apply only to “residential

construction properties.” Id. §§ 572.13A(5), .13B(5).

      3. Interpretation of these provisions. Having summarized Iowa Code

sections 572.13A and 572.13B, we now turn to their interpretation and

application in this case. “Our first task in interpreting a statute is to determine
                                         17

whether the relevant language is ambiguous. ‘If the statutory language is plain

and the meaning clear, we do not search for legislative intent beyond the express

terms of the statute.’ ” United Elec., Radio & Mach. Workers of Am. v. Iowa Pub.

Emp’t Rels. Bd., 928 N.W.2d 101, 109 (Iowa 2019) (citation omitted) (quoting

State v. Pub. Emp. Rels. Bd., 744 N.W.2d 357, 360–61 (Iowa 2008)).

      We begin with the statute’s text. Calcaterra v. Iowa Bd. of Med., 965

N.W.2d 899, 904 (Iowa 2021) (“When interpreting the meaning of a statute, we

start with the statute’s text.”). FAC’s primary textual argument asserts that

section   572.13A(2)—which      allows   subcontractors    to   post   a   notice   of

commencement—expressly sets a ten-day time limit for doing so. FAC points to

the following language:

      If a general contractor or owner-builder fails to post the required
      notice of commencement of work . . . pursuant to subsection 1,
      within ten days of commencement of the work on the property, a
      subcontractor may post the notice in conjunction with the posting
      of the required preliminary notice pursuant to section 572.13B.

Id. § 572.13A(2) (emphasis added). FAC insists that the italicized clause qualifies

the clause that follows, thus placing a time limit on subcontractors’ ability to post

a notice of commencement. Borst and Kelly disagree and argue that the italicized

clause qualifies the preceding “if” clause, and therefore clarifies the amount of

time general contractors or owner-builders have to post before a subcontractor is

allowed to do so.

      Perhaps there is some ambiguity here. Given that the clause in question

is set off by commas on both sides, it is not grammatically clear whether FAC or

the subcontractors get the better of a debate based on punctuation alone. But a
                                           18

broader look at sections 572.13A and 572.13B as a whole provides clarity. See

Calcaterra, 965 N.W.2d at 904 (“Statutes need to be read as a whole . . . .”

(quoting Porter v. Harden, 891 N.W.2d 420, 425 (Iowa 2017))); see also Iowa Code

§ 4.1(38) (“Words and phrases shall be construed according to the context . . . .”);

Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts

167 (2012) (“Context is a primary determinant of meaning. A legal instrument

typically contains many interrelated parts that make up the whole. The entirety

of the document thus provides the context for each of its parts.”). Considering

the statute as a whole, we are convinced that the ten-day time limit in section

572.13A    applies   only   to   general   contractors   and   owner-builders,   not

subcontractors.

      First, timing. As Borst and Kelly point out, it would seemingly be

impossible for a subcontractor to comply with the same ten-day deadline

governing contractors and owner-builders that runs from the commencement of

the overall work. How would a subcontractor know whether a contractor or

owner-builder had failed to meet the ten-day deadline until that ten-day deadline

had passed? And different subcontractors arrive on the jobsite at different times.

What if the subcontractor in question didn’t show up (or wasn’t even hired) until

more than ten days after the overall work commenced? Under FAC’s

interpretation, the ten days a subcontractor has in which to post a notice of

commencement of work must necessarily expire before the condition precedent

for posting it is even satisfied. This result would be absurd, and absurd results

should be avoided. See Iowa Ins. Inst. v. Core Grp. of the Iowa Ass’n for Just., 867
                                         19

N.W.2d 58, 75 (Iowa 2015) (“We have long recognized that statutes should not

be interpreted in a manner that leads to absurd results.”); see also Iowa Code

§ 4.4(3) (“In enacting a statute, it is presumed that . . . a just and reasonable

result is intended.”).

      Also, section 572.13A contemplates one notice of commencement of work

per project. See Iowa Code §§ 572.13A(2) (referring to “the required notice of

commencement of work”, .13A(3)(a) (stating that after the notice is posted, the

administrator of the registry “shall assign” a registry number for the improved

property). The notice of commencement of work triggers the assignment of a

unique MNLR number for that project that subcontractors later must reference

when they file any preliminary notices. Id. §§ 572.13A(3)(a), .13B(1)(b).

      It would seem odd to allow the fate of all subcontractors to rise or fall based

on whether one early-arriving subcontractor undertook the chivalrous act of

posting a notice within ten days of commencement of the overall work for the

benefit of all subcontractors. Borst and Kelly’s interpretation, by contrast, allows

a subcontractor that is personally concerned about getting paid and plans to

post a preliminary notice to protect themselves by posting any missing notice of

commencement of work “in conjunction with the posting of the required

preliminary notice.” Id. § 572.13A(2).

      In fact, section 572.13A anticipates that the notice of commencement

might have to be filed before any subcontractor has even been hired. The notice

of commencement posting requirement applies to “a general contractor, or an

owner-builder who has contracted or will contract with a subcontractor.” Id.
                                             20

§ 572.13A(1) (emphasis added). That being the case, how can subcontractors be

held to the contractor/owner-builder’s ten-day deadline?

       Further, with respect to a subcontractor, the statute says that the

subcontractor “may” post the missing notice that the owner-builder/contractor

has failed to post to the MNLR. Id. § 572.13A(2). It doesn’t say that the

subcontractor “must.” The “must” language applicable to subcontractors

surfaces in the following sentence, which provides “[a] notice of commencement

of work must be posted to the mechanics’ notice and lien registry internet site

[note the passive voice] before preliminary notices pursuant to section 572.13B

may be posted.” Id. Logically, therefore, a subcontractor has an option to supply

a missing notice of commencement of work; the only requirement is that

somebody do so before preliminary notices may be posted.4

       FAC points out that House File 675, the bill that established these posting

requirements, had an attached bill explanation indicating that mechanics’ liens

are only effective for the work accomplished after a notice of commencement has

been posted. H.F. 675, 84th G.A., 2d Sess., explanation (Iowa 2012). The

       4Itis also worth noting that the secretary of state has interpreted Iowa Code section
572.13A(2) in the same way that we do. Its rule provides,
              Prior to the posting of a preliminary notice, a notice of commencement of
       work must be posted on the MNLR. If the general contractor or owner-builder has
       not posted a notice of commencement of work on the MNLR within ten days of
       commencement of work on the property, then the subcontractor may post a notice
       of commencement of work on the MNLR prior to posting the preliminary notice.
Iowa Admin. Code r. 721—45.5(1)(b).
        We are not deciding today whether the secretary of state has been clearly vested with
interpretive authority over section 572.13A(2). Iowa Code section 572.34(1) provides that the
secretary “shall adopt rules pursuant to chapter 17A for the creation and administration of the
registry.” We simply note that the party charged with administering the MNLR—the secretary of
state—concurs in our interpretation of the underlying statute.
                                         21

explanation stated, “A preliminary notice posted before the balance due is paid

to the general contractor or owner-builder by the owner is effective as to all labor,

service, equipment, or material furnished to the property subsequent to the

posting of the notice of commencement of work.” Id. (emphasis added).

      While we do “give weight to explanations attached to bills as indications of

legislative intent” when a statute is ambiguous, ultimately, “[t]he legislature

enacts the bill—not the accompanying explanation.” Iowa Ins. Inst., 867 N.W.2d

at 76 (quoting Star Equip., Ltd. v. State, 843 N.W.2d 446, 454 & n.3 (Iowa 2014)).

In this instance, the bill explanation cited by FAC is at odds with the actual text

of section 572.13B(1), which provides, “A preliminary notice posted before the

balance due is paid to the general contractor or the owner-builder is effective as

to all labor, service, equipment, and material furnished to the property”—without

qualification. Iowa Code § 572.13B(1) (emphasis added).

      The bill explanation appears to have mistakenly blended section

572.13A(1)   with   section   572.13B(1).     The   former   states,   “A   notice   of

commencement of work is effective only as to any labor, service, equipment, or

material furnished to the property subsequent to the posting of the notice of

commencement of work.” Id. § 572.13A(1). But section 572.13A, as we have

discussed, deals with owner-builders and contractors and the validity of

contractor liens. It is titled “Notice of commencement of work — general

contractor — owner-builder.” Id. § 572.13A; see State v. Hall, 969 N.W.2d 299,

307 (Iowa 2022) (“Although the title of a statute cannot change the plain meaning

of the statutory text, it can be considered in interpreting the text.”). By contrast,
                                              22

section 572.13B is titled “Preliminary notice — subcontractor — residential

notice.” Iowa Code § 572.13B. It is only logical to conclude that “effective,” as

used in section 572.13A(1), refers to the effectiveness of a contractor lien; while

“effective,” as used in section 572.13B(1), refers to the effectiveness of a

subcontractor lien. Otherwise, the two provisions would be in conflict. See State

v. Iowa Dist. Ct. for Warren Cnty., 828 N.W.2d 607, 614 (Iowa 2013) (“We try to

read statutes to avoid conflicts . . . .”).

      FAC also claims that Borst and Kelly’s interpretation is unfair to

construction lenders and will allow “third parties [to] be surprised by mechanics’

liens arising months or years after a subcontractor commences work.” We think

this concern is overstated.

      Lenders are no worse off than they were before House File 675 was enacted

in 2012. In fact, they are better off. Previous law allowed all subcontractors to

perfect mechanics’ liens on residential projects within ninety days after the

completion of their work without needing to worry about a notice of

commencement of work having been posted. See Iowa Code §§ 572.8–.9 (2011).

      Also, under current law, as under prior law, a construction lender that

(unlike FAC) recorded its mortgage before a particular subcontractor began its

work gets priority over that subcontractor’s mechanics’ lien. See id. § 572.18(2)

(2018). This can apply even to advances that the lender makes after the mortgage

is recorded. See Blue Grass Sav. Bank v. Cmty. Bank & Tr. Co., 941 N.W.2d 20,

23–29 (Iowa 2020) (recognizing that a mortgage’s priority can extend to funds

advanced after the recording of the mortgage). Additionally, with respect to
                                         23

residential construction, a mechanics’ lien is enforceable only to the extent of

the balance due the contractor or the owner-builder when the preliminary notice

is filed. Iowa Code § 572.13B(3)(a). A prudent lender can use self-protection

methods such as requiring its borrower to bond the project, joint check or escrow

arrangements, or requirements that subcontractors waive or subordinate their

lien rights. Finally, it’s worth noting that subcontractors who work on property

presumably enhance the value of that property, and thus enhance the value of

the lender’s collateral—even when the lender stands in a second position behind

them.

         The point of Iowa Code section 572.13A is to incentivize contractors and

owner-builders to promptly post the notice of commencement of work and

thereby activate the MNLR for the jobs they manage, not to penalize

subcontractors that were not in a position to post that notice of commencement

until sometime later.

         For all these reasons, we conclude that Borst and Kelly have valid

mechanics’ liens even though no notices of commencement were posted as to

any of the five properties until February 2018, months after work on those

properties actually commenced. The ten-day deadline in both subsections 1 and

2   of    section   572.13A   applies   to    contractors/owner-builders,   not   to

subcontractors. Also, Borst’s and Kelly’s mechanics’ liens cover all work they

performed, subject to the limits in section 572.13B(3)(a), not merely the work

performed after the notice of commencement was posted. See id. § 572.13B(1).
                                           24

         B. Priority of the Borst and Kelly Mechanics’ Liens. Chapter 572 allows

mechanics’ liens to obtain priority over other types of liens if certain conditions

are met. Section 572.18 describes these conditions as follows:

               1. Mechanics’ liens posted by a general contractor or
         subcontractor within ninety days after the date on which the last of
         the material was furnished or the last of the claimant’s labor was
         performed and for which notices were properly posted to the
         mechanics’ notice and lien registry internet site pursuant to sections
         572.13A and 572.13B shall be superior to all other liens which may
         attach to or upon a building or improvement and to the land upon
         which it is situated, except liens of record prior to the time of the
         original commencement of the claimant’s work or the claimant’s
         improvements, except as provided in subsection 2.

               2. Construction mortgage liens shall be preferred to all
         mechanics’ liens of claimants who commenced their particular work
         or improvement subsequent to the date of the recording of the
         construction mortgage lien.

Iowa Code § 572.18; see, e.g., Midland Sav. Bank FSB v. Stewart Grp., LC, 533

N.W.2d 191, 193 (Iowa 1995) (explaining that mechanics’ liens are preferred over

all other liens except for a construction mortgage recorded before the

subcontractor commenced their work).

         The first condition that Kelly and Borst had to satisfy to attain priority over

other types of liens was to post their mechanics’ liens “within ninety days after

the date on which the last of the material was furnished or the last of the

claimant’s labor was performed.” Iowa Code § 572.18(1). Both subcontractors

did so. Borst’s work ended on December 19, 2017, and Borst posted its lien on

February 2, 2018, forty-six days later. Kelly’s final day working on the property

was January 15, 2018, and Kelly posted its liens on February 1, eighteen days

later.
                                               25

       Next, Borst’s and Kelly’s notices of commencement and preliminary

notices had to be “properly posted” to the MNLR website. Id. We have already

determined that this occurred.

       Finally, the subcontractors had to commence their work on the properties

before FAC recorded its mortgages in order to get priority over FAC. See id.

§§ 572.18(1)–(2). Borst started work on July 3, 2017. Kelly started sometime in

September 2017. FAC’s earliest mortgages were not recorded until November 13,

2017, well after the subcontractors had begun their work. That being so, Borst’s

and Kelly’s mechanics’ liens have priority over FAC’s inferior mortgages.5

       C. Response to the Dissent. The dissent argues that the phrase

“commencement of the work” as used in the second sentence of Iowa Code

section 572.13A(2), refers to commencement of that subcontractor’s work. This

argument avoids some of the possible absurdities discussed in part IV.A above.

No longer would the subcontractor potentially be required to file the notice of

commencement of work before arriving at the project or even being hired. But it

creates other problems.

       For one thing, when the same term is used repeatedly in the same statute,

we normally give it the same meaning each time. See, e.g., State v. Paye, 865

N.W.2d 1, 7 (Iowa 2015); State v. Sewell, 960 N.W.2d 640, 643 (Iowa 2021). It

would be very odd for every other use of “commencement of work” or

       5Mechanics’   liens have long been given this preference in Iowa. See, e.g., Nw. Nat’l Bank
of Sioux City v. Metro Ctr., Inc., 303 N.W.2d 395, 398 (Iowa 1981) (applying the 1979 version of
Iowa Code section 572.18 and stating that “the mechanic’s lien arises upon furnishing of labor
or material; not upon its filing”).
                                         26

“commencement of the work” to be referring to the commencement of the work

as a whole, and this use alone to be referring to only that subcontractor’s work.

Let us quote again Iowa Code section 572.13A(2):

      If a general contractor or owner-builder fails to post the required
      notice of commencement of work to the mechanics’ notice and lien
      registry internet site pursuant to subsection 1, within ten days of
      commencement of the work on the property, a subcontractor may
      post the notice in conjunction with the posting of the required
      preliminary notice pursuant to section 572.13B. A notice of
      commencement of work must be posted to the mechanics’ notice and
      lien registry internet site before preliminary notices pursuant to
      section 572.13B may be posted.

(Emphasis added.) Under the dissent’s interpretation, “commencement of work”

as used in the first and second sentences refers to something totally different

from “commencement of the work” as used in the first sentence. That is

implausible.

      Note also the use of the definite article, i.e., “the work,” rather than a

possessive, i.e., “its work.” Id. If anything, that helps clarify that the statute is

referring to the overall work on the property, rather than a specific entity’s work.

In section 572.18, subsection 1, when the legislature wanted to refer to the

subcontractor’s commencement of their own work, it used the qualifying phrase

“the claimant’s work or the claimant’s improvements.” Id. § 572.18(1). In

subsection 2, when the legislature again wanted to refer to a subcontractor’s

commencement of their own work, it used the qualifying phrase “their particular

work or improvement.” Id. § 572.18(2). No qualification here.

      Furthermore,     under    the   dissent’s   interpretation,   any   notice   of

commencement of work has to be filed by the subcontractor within ten days of
                                        27

the subcontractor’s commencement of their work. But it also has to be filed “in

conjunction with the posting of the required preliminary notice.”               Id.

§ 572.13A(2). So subcontractors would have to regularly check the MNLR before

furnishing anything to a residential jobsite, no matter how minor. If no notice of

commencement of work appeared in the search, the subcontractor would need

to file both a notice of commencement of work and a preliminary notice

immediately. Subsequent subcontractors would not be so time-limited in their

filing of the preliminary notice since they would not be subject to the “in

conjunction with” requirement. That seems inequitable.

      Moreover, the dissent’s interpretation fails to harmonize and give effect to

both Iowa Code section 572.13A(1) and section 572.13B(1). The former states, “A

notice of commencement of work is effective only as to any labor, service,

equipment, or material furnished to the property subsequent to the posting of

the notice of commencement of work.” Id. § 572.13A(1). The latter states, “A

preliminary notice posted before the balance due is paid to the general contractor

or the owner-builder is effective as to all labor, service, equipment, and material

furnished to the property by the subcontractor.” Id. § 572.13B(1). As we have

already discussed, the logical way to reconcile the two provisions is to conclude

that the former provision applies to contractors (since the preceding sentence

talks about the contractor or owner-builder’s duty to post the notice of
                                                 28

commencement of work), whereas the latter provision applies to subcontractors.

The dissent gives no effect to the latter provision.6

        Additionally, the dissent’s interpretation still leaves some of the absurdity

in place. What if the overall work and the subcontractor’s work begin at the same

time, as can often happen? Once again, the subcontractor won’t know if the

contractor/owner-builder failed to do what it was supposed to do until the ten

days have passed, at which point it would be too late for the subcontractor to

file.

        Finally, it’s notable that the Iowa Practice treatise rejects the dissent’s

reading of section 572.13A(2) and agrees with ours. According to that treatise:

              If a general contractor or owner-builder fails to post the
        required notice of commencement of work to the mechanics’ notice
        and lien registry internet Web site pursuant to I.C.A. § 572.13B(1)
        within 10 days of commencement of the work on the property, a
        subcontractor may post the notice in conjunction with the posting
        of the required preliminary notice. A notice of commencement of

        6The dissent worries about disparate treatment between contractors and subcontractors
if the scope-of-the-lien provision in Iowa Code section 572.13A(1) applies only to contractors and
not subcontractors. Again, the dissent overlooks the fact that the preceding sentence applies
only to contractors and also overlooks the fact that its interpretation gives no effect to the
scope-of-the-lien provision in section 572.13B(1).
        In any event, there is no disparate treatment. It is the responsibility of the contractor to
post the notice of commencement of work. See id. § 572.13A(1) (“[A] general contractor . . . shall
post a notice of commencement of work . . . .”). This notice doesn’t identify any particular
subcontractors but gives notice that there are or will be subcontractors on the job. This notice
contains information that should be readily available to the contractor—i.e., the name and
address of the owner and the date of commencement of the overall work—but that may not be
readily available to a subcontractor. See id. § 572.13A(1)(a), (e). Thus, it is fair for the contractor
to have its lien potentially impacted if it doesn’t do what it is supposed to do.
         By contrast, a subcontractor “may post” the notice of commencement of work if the
contractor fails to do so. See id. § 572.13A(2). The subcontractor’s lien also may be affected by a
delay in the posting of the notice of commencement of work, but the effect is only indirect because
the subcontractor can’t post a preliminary notice until there is a notice of commencement of
work on file. See id. § 572.13B(3)(a) (stating that the subcontractor’s lien is enforceable only to
the extent of the balance due the contractor “at the time of the posting of the preliminary notice”).
It is fair and reasonable for the effect on the subcontractor’s rights to be secondary because the
subcontractor’s responsibility is secondary.
                                        29

      work must be posted to the mechanics’ notice and lien registry
      internet website before preliminary notices pursuant to I.C.A.
      § 572.13B may be posted.

10 Barry A. Lindahl, Iowa Practice Series: Civil Practice Forms § 61:3, at 717

(2022 ed. 2022); see also id. § 61:3, at 718 (“A general contractor who fails to

provide the required notice is not entitled to a lien and remedy provided by this

chapter.”). The citation to section 572.13B(1) is a technical error; it should be

section 572.13A(1). But substantively, the treatise agrees with our view that the

second comma is the one that does the work. The treatise also agrees that the

“effective” language in that section applies to the general contractor. Id. § 61:3,

at 717.

      We respectfully decline to adopt the dissent’s views.

      D. Admissibility of FAC’s Loan Payoff Statements. We now address the

evidentiary issue raised by the cross-appeal. Dostal Developers and Randy

Dostal contend that the loan payoff statements created by FAC’s sub-servicer

and offered into evidence through an FAC employee were inadmissible hearsay.

The district court, however, admitted the payoff statements under the business

records exception. When the court of appeals considered this issue on appeal, it

determined that any error in admitting the records would have been harmless

because FAC’s Mark Thomas “testified without objection to the figures contained

in the documents before the documents were offered or admitted.”

      We question whether Thomas actually testified to the figures contained in

the documents “without objection.” This was a trial to the court. In the course of

attempting to lay foundation for the admission of each of the five payoff
                                        30

statements, FAC’s attorney asked Thomas to describe the contents of each such

statement, including unpaid principal and interest. This occurred without

objection. But when FAC tried to offer the statements themselves into evidence,

the Dostal parties objected. Although the better practice would have been to

object to testimony about the contents of exhibits that were not yet in evidence,

we are not prepared to accept the court of appeals’ characterization of the

situation as a waiver, at least with a bench trial. So, we turn to the merits.

      FAC argues the payoff statements were properly admitted anyway under

Iowa Rule of Evidence 5.803(6) as business records. In the proceedings below,

the Dostal parties objected on the ground the statements were prepared for

litigation purposes rather than in the ordinary course of business.

      We disagree. The record shows that FAC’s loan sub-servicer, BSI, routinely

furnished these types of payoff statements per FAC’s request. Thomas explained,

“It’s the standard practice for how we order payoffs when we, the lender, want to

know what is outstanding on the loans.” He confirmed it was “the regular

practice of FAC to get payoff statements to show the balance of a loan at any

given time.” So while these particular statements may have been requested for

litigation purposes, from the standpoint of the party that prepared them (BSI)

they were ordinary business records. See, e.g., U.S. Bank Tr., N.A. v. Jones, 925

F.3d 534, 537–38 (1st Cir. 2019) (Souter, J.) (upholding the admission under the

business records exception of a computer printout that contained an account

summary and a list of transactions related to the loan); Deutsche Bank Nat’l Tr.

Co. v. de Brito, 235 So. 3d 972, 975–76 (Fla. Dist. Ct. App. 2017) (finding that a
                                        31

payoff printout from a third-party vendor should have been admitted into

evidence under the business records exception); Beal Bank, SSB v. Eurich, 831

N.E.2d 909, 913 (Mass. 2005) (“Clearly, EPS, as the bank’s servicing agent, had

a business duty accurately to maintain such records for the bank. Given EPS’s

obligation to maintain these records, and the bank’s reliance on such records,

the judge was warranted in finding that the two computer printouts were made

in good faith and in the regular course of business.”).

        V. Conclusion.

        For the foregoing reasons, we affirm the decision of the court of appeals.

We reverse the district court on the issue of Randy Dostal’s personal liability but

affirm it in all other respects. The case is remanded for further proceedings

consistent with this opinion.

        DECISION OF COURT OF APPEALS AFFIRMED; DISTRICT COURT

JUDGMENT AFFIRMED IN PART AND REVERSED IN PART ON APPEAL,

AFFIRMED ON CROSS-APPEAL.

        Christensen, C.J., and Appel and Waterman, JJ., join this opinion.

McDermott, J., files a dissenting opinion, in which McDonald and Oxley, JJ.,

join.
                                        32

                 #20–0972, Borst Bros. Constr., Inc. v. Thomas Dostal Devs., Inc.

McDERMOTT, Justice (dissenting).

      I respectfully dissent from the majority’s holding that the mechanics’ liens

have priority over the bank’s construction mortgages in this case. I disagree with

the majority’s interpretation of the mechanic’s lien recording statutes found in

Iowa Code sections 572.13A and 572.13B (2018), and would hold that the

required notices in this case weren’t properly posted and thus the

subcontractors’ mechanics’ liens are subordinate to the bank’s construction

mortgages.

      As the majority correctly recites, section 572.13A, subsection 1 requires a

general contractor or owner-builder who has contracted with a subcontractor to

post a “notice of commencement of work” to the mechanic’s notice and lien

registry website “no later than ten days after the commencement of work on the

property.” Id. § 572.13A(1). The statute continues: “A notice of commencement

of work is effective only as to any labor, service, equipment, or material furnished

to the property subsequent to the posting of the notice of commencement of

work.” Id.

      Dostal Developers, the owner-builder, failed to post a notice of

commencement. Section 572.13A, subsection 2 spells out the requirements for

subcontractors to file mechanics’ liens when the general contractor or owner-

builder doesn’t file a notice of commencement:

      If a general contractor or owner-builder fails to post the required
      notice of commencement of work to the mechanics’ notice and lien
      registry internet site pursuant to subsection 1, within ten days of
      commencement of the work on the property, a subcontractor may
                                       33

      post the notice in conjunction with the posting of the required
      preliminary notice pursuant to section 572.13B.

Id. § 572.13A(2).

      Both the majority and I read the sentence as an “if-then” statement (also

known as a “conditional” sentence); we just disagree on where the unwritten,

implied “then” goes. I believe the sentence must be read as follows: “If a general

contractor or owner-builder fails to post the required notice of commencement

. . . pursuant to subsection 1, [then] within ten days of commencement of the

work on the property, a subcontractor may post the notice in conjunction with

the posting of the required preliminary notice.” Id. (emphasis added). The

majority’s reading places the implied “then” later: “If a general contractor or

owner-builder fails to post the required notice of commencement . . . pursuant

to subsection 1, within ten days of commencement of the work on the property,

[then] a subcontractor may post the notice in conjunction with the posting of the

required preliminary notice.” Id. (emphasis added).

      The phrase “within ten days of commencement of the work on the

property” is set off by commas on both sides. Id. The majority’s reading more or

less ignores the comma between “subsection 1” and “within ten days.” Such a

reading thus treats the phrase set off by commas as simply providing more

information about the requirements of subsection 1. But that’s already achieved

by the sentence’s explicit reference to it: “pursuant to subsection 1.” Id.

Subsection 1, as we know, requires the posting within ten days of

commencement. Id. § 572.13A(1). The legislature had no need to repeat the

particular detail that subsection 1 included a ten-day deadline.
                                       34

      Conversely, if we read the sentence in a way that gives effect to the comma,

the phrase “within ten days of commencement of the work on the property” does

some work in the sentence: it imposes a deadline on the subcontractor to post

the notice of commencement if the general contractor or owner-builder didn’t

already. The majority’s reading suggests that there’s no deadline; the

subcontractor could post the notice of commencement months, or potentially

years, after starting its work on the project without consequence. By reading the

phrase “within ten days of commencement of the work on the property” as

establishing a deadline tied to the subcontractor’s actual start of work on the

project, the “notice of commencement” actually gives meaning to the word

commencement.

      The majority also reads “the work” in section 572.13A, subsection 2 to

refer only to the general contractor’s or owner-builder’s work, not the

subcontractor’s own work. On this, too, I disagree with the majority. The word

“work” is used over twenty-five times in chapter 572. See generally id. ch. 572.

It’s not defined anywhere in the statute, but by context we see that it refers

generally to furnishing labor or materials that improve the property, without

regard to any particular person. For instance, Iowa Code section 572.2 sets forth

the “persons entitled to lien” and refers to “work” by owners, owner-builders,

general contractors, and subcontractors:

      Every person who furnishes any material or labor for, or performs
      any labor upon, any building or land for improvement, alteration, or
      repair thereof, including those engaged in the construction or repair
      of any work of internal or external improvement . . . by virtue of any
                                         35

      contract with the owner, owner-builder, general contractor, or
      subcontractor shall have a lien upon such building or improvement.

Id. § 572.2(1) (emphasis added). The term “the work” in section 572.13A,

subsection 2 can be, and makes most sense in context, applied with reference to

the subcontractor’s work on the project. Id. § 572.13A(2). Such a reading also

resolves the potential problem that the majority raises about a subcontractor

needing to file the notice of commencement within ten days of the general

contractor’s or owner-builder’s work on the project, which a subcontractor

(particularly one hired for the project long after other work has started) might

have no information about.

      A notice of commencement of work posted to the mechanic’s notice and

lien registry website puts the world on notice that at least one subcontractor has

performed (or is about to perform) work on the project that will trigger potential

lien rights against the property. I disagree with the majority’s suggestion that “[a]

prudent lender can use self-protection methods” (including, for example,

“requiring the borrower to bond the project”) to guard against the prospect of

unrevealed mechanic’s lien claimants. If the statutory requirements are followed,

a lender advancing funds on a project should be able to check the mechanic’s

notice and lien registry website to determine whether a notice has been filed and

thus whether a mechanic’s lien claimant might exist. A “notice and lien registry”

that provides no notice of any potential lien isn’t much of a “notice and lien

registry.” The majority’s interpretation torpedoes an obvious benefit of the

statute.
                                       36

      Perhaps more importantly, as section 572.13A, subsection 1 states, a

notice of commencement of work is only effective for labor or material furnished

after the notice of commencement of work is posted. The majority points out that

this particular sentence isn’t restated in subsection 2, and from that concludes

that the limitation applies only to general contractors and owner-builders. But I

struggle to pull that from the text of the statute, considering that the sentence

merely states: “A notice of commencement of work is effective only as to any

labor, service, equipment, or material furnished to the property subsequent to

the posting of the notice of commencement of work.” Id. § 572.13A(1). The

limitation, by my reading of section 572.13A, attaches to the notice of

commencement irrespective of the party that filed it.

      Besides running contrary to the text of section 572.13A, subsection 2, the

majority’s reading that this limitation applies only to general contractors and

owner-builders but not to subcontractors would have a strange result. The notice

of commencement requirement has a simple function: it discloses that a general

contractor or owner-builder “has contracted or will contract with a subcontractor

to provide labor or furnish material for the property.” Id. § 572.13A(1). It

announces, in other words, that as to the particular property at issue, at least

one potential lien-exercising subcontractor exists. Under the majority’s reading,

there’s no consequence to a subcontractor that fails to timely post the notice of

commencement disclosing that it (a subcontractor) exists, but a general

contractor or owner-builder that fails to timely post the same notice about a

subcontractor suffers a consequence. Considering the subcontractor-disclosing
                                       37

aim of section 572.13A, the disparate treatment strikes me as contrary to both

text and logic.

      Iowa Code section 572.18 grants mechanic’s liens priority over other liens

in certain circumstances. Section 572.18(1) describes those circumstances:

      Mechanics’ liens posted by a general contractor or subcontractor
      within ninety days after the date on which the last of the material
      was furnished or the last of the claimant’s labor was performed and
      for which notices were properly posted to the mechanics’ notice and
      lien registry internet site pursuant to sections 572.13A and 572.13B
      shall be superior to all other liens which may attach to or upon a
      building or improvement and to the land upon which it is situated,
      except liens of record prior to the time of the original commencement
      of the claimant’s work or the claimant’s improvements, except as
      provided in subsection 2.

(Emphasis added.) Subsection 2 then states that construction mortgage liens

have priority over all mechanic’s liens whose claimants commenced their

particular work after the date that the lender recorded its construction mortgage

lien. Id. § 572.18(2).

      For mechanics’ liens to have priority over other liens, the mechanics’ liens

(1) must be posted within ninety days from when labor or materials were last

provided and (2) notices must be “properly posted to the mechanics’ notice and

lien registry internet site pursuant to sections 572.13A and 572.13B.” Id.

§ 572.18(1). Because Borst and Kelly failed to timely file a notice of

commencement within ten days of beginning their work, notices were not

“properly posted to the mechanics’ notice and lien registry internet site pursuant

to sections 572.13A and 572.13B.” Id. Their mechanics’ liens thus should not

have priority over Finance of America’s construction mortgage under section

572.18, and I would reverse the district court’s ruling that held to the contrary.
                                38

McDonald and Oxley, JJ., join this dissent.