Time and time again I here business clients who are concerned about protecting their rights to collect against a customer by being concerned that “it might offend them.” Liens are a perfect example of this.
Under recent Iowa Law, contractors who work on residential structures need to file a notice of commencement of work with the Secretary of State. This notice puts the lender, the home owner and anybody else working on the project that work has begun. This is important as failure to file this notice will prevent a contractor from placing a lien against the finished product. While very few people would be offended by a bank telling them they need a lien (which is what a mortgage is) against your property to make sure you pay as promised, contractors are concerned that those same property owners will have their dander up about a potential lien filing by a contractor.
It isn’t limited to just contractors. If a farm operator custom feeds for a third party owner, that feeder has a right to file a lien to ensure payment. The lien must be filed with in so many days of the livestock arriving at the property or the lien is not enforceable. Again, the producer sometimes shy’s away from protecting its rights to be paid by the owner of the animals for fear of offending. Feed suppliers can also file a lien to make sure that the feed provided to the livestock is paid back to the party delivering the feed on credit. Failure to protect yourself as a contract feeder or a feed supplier for fear of offending the customer may result in the t rather offensive outcome of being “out of the money” when the customer files for bankruptcy or other wise doesn’t have enough money to pay all the creditors.
Just like estate planning for a farm operation, farm operations need to divorce themselves from the nostalgia of farm land ownership and operation with the harsh realities that treating the operation as a business including a incorporating a legal team into the operation may prevent being left courtesouly holding the door for properly secured creditors to come in and grab money that could rightfully operations funds.
Inspections on the Horizon
Livestock operations of any sort of size should be aware that because of a settlement reached between the Iowa Department of Natural Resources and the Federal EPA, operations are going to be inspected for discharge permit requirements. Under Iowa law, confined operations really cant discharge under most circumstances. Most new buildings and sites will be confident that hey will pass without a second thought. The rub may come in when a finisher unit with total containment is co located with a 50 head steer lot. Because the finisher unit is large enough to be inspected, the otherwise non inspected steer lot will be given a look. While the DNR is supposed to inspect in a specific order, reports indicate that they are taking operations “out of order” as the situation suits them.
A producer can do a “self audit” under Iowa law that will allow the producer to self report short comings in their site plans. While as a general rule tattling on yourself is not prudent legal strategy, in this case, self reporting may be a whole lot less financially burdensome than “ducking and covering” and hoping the looming inspection is not going to find a deficiency.
