Construction Claim Rules in Iowa

Statutory interest rate

Floating, 1-yr Treasury constant maturity + 2% (both pre- and post-judgment)

Iowa ties judgment interest to the one-year Treasury constant maturity rate published by the Federal Reserve, plus 2 percentage points, set as of the rate in effect immediately before judgment. If the underlying contract specifies its own rate (within the usury cap), the contract rate controls instead. Interest generally accrues from commencement of the action, not merely from judgment, for most claims.

Compounding: Simple, computed daily on the judgment balance.

Citation: Iowa Code § 535.3 (incorporating § 668.13's rate mechanism)

Source: https://www.legis.iowa.gov/docs/code/535.3.pdf

Last checked: 2026-09-17

The Iowa Judicial Branch publishes an updated table of the resulting rate each year, which is the figure to use rather than a hardcoded number. At the last check, in August 2026, the one-year Treasury constant maturity rate plus 2% worked out to about 6.04%.

Accrual: breach of contract claim

Notable outlier: not date of breach, from the date the lawsuit was filed

Iowa Code § 535.3 calculates interest on money judgments using the rate mechanism in § 668.13, which accrues interest, other than interest on future damages, from the date the action was commenced. This applies broadly across judgment types in Iowa, including contract claims, not just from the date of breach.

Citation: Iowa Code §§ 535.3, 668.13

Source: https://law.justia.com/codes/iowa/title-xv/chapter-668/section-668-13/

Section 668.13 is the provision that starts interest at the commencement of the action. Confirm the cross-reference in § 535.3 against the current text before relying on it for an ordinary contract judgment.

Accrual: property damage / tort claim

Same rule as contract claims: from the date the action was commenced, not the date of loss

Iowa Code § 668.13, in the tort/comparative-fault chapter, explicitly accrues interest, other than interest awarded for future damages, from the date of the commencement of the action. This covers property-damage tort claims directly and is the same filing-date-based mechanism as the contract entry above.

Citation: Iowa Code § 668.13

Source: https://law.justia.com/codes/iowa/title-xv/chapter-668/section-668-13/

Like Texas, Michigan, Massachusetts and Louisiana's tort rule, Iowa ties interest to the filing date rather than the date of loss or breach, so filing promptly directly affects how much interest accrues.

Actual Cash Value rule

Broad evidence rule

Iowa courts consider all facts and circumstances that fairly tend to prove actual value (condition, age, original cost, market value, replacement cost) rather than a rigid replacement-cost-minus-depreciation formula, with full indemnification (and no more) as the touchstone.

Citation: Britven v. Occidental Ins. Co. of California, 13 N.W.2d 791 (Iowa 1944)

Source: https://www.propertyinsurancecoveragelaw.com/2015/06/articles/insurance/calculating-actual-cash-value-part-11-iowa/

Britven exists with this citation (13 N.W.2d 791, 234 Iowa 682, decided April 4, 1944), but no free full-text copy is available online. The linked article is the accessible source.

ACV statute or regulation

Iowa has adopted an administrative rule that statutorily defines ACV as replacement cost less depreciation (or market value) and requires the insurer to provide a depreciation worksheet on request, but it does not restrict labor depreciation specifically.

Iowa Administrative Code rule 191-15.44(507B), 'Standards for Determining Replacement Cost and Actual Cash Value,' defines actual cash value as the replacement cost of the property at the time of loss, less depreciation if any and permits an insurer to instead use market value to determine ACV. The rule requires that, upon the insured's request, the insurer provide a copy of the claim file worksheet(s) detailing any and all deductions taken for depreciation. The rule text located does not single out labor cost as exempt from depreciation, so it does not ban or restrict labor depreciation, it only requires that any depreciation taken be documented and disclosed on request.

Citation: Iowa Admin. Code r. 191-15.44(507B)

Source: https://www.legis.iowa.gov/docs/iac/rule/03-20-2024.191.15.44.pdf

Recoverable depreciation holdback

No Iowa statute sets a holdback release deadline. An administrative rule covers how ACV is determined but does not resolve the labor question.

Iowa Admin. Code 191-15.44 sets standards for determining replacement cost and actual cash value and requires insurers to explain in writing when recovery is limited because the property has only nominal value. It does not address holdback release timing or whether labor may be depreciated. On that question a federal court applying Iowa law found it illogical that an insured would expect labor to be depreciated under an undefined ACV term and commentators have urged Iowa to adopt a rule like California's. No Iowa regulation on the point exists.

Citation: Iowa Admin. Code 191-15.44.

Source: https://regulations.justia.com/states/iowa/agency-191/unfair-trade-practices/chapter-15/rule-191-15-44/

“No damages for delay” clause enforceability

Enforceable, with a strict active-interference exception requiring willfulness and bad faith

The Iowa Supreme Court enforced a no-damages-for-delay clause against a contractor's claim for extra heating costs caused by city- and other-contractor-caused delay, holding those delays were contemplated by the parties and entitled the contractor only to the time extensions it had already received, not additional money damages. A federal court applying Iowa law later distilled the active-interference exception into a strict, literal standard requiring some affirmative, willful act, in bad faith, to unreasonably interfere with the plaintiff's compliance with the contract terms, expressly rejecting a negligence-based standard and holding the doctrine requires more than a simple mistake, an error in judgment, or a lack of total effort.

Citation: Cunningham Bros., Inc. v. City of Waterloo, 254 Iowa 659, 117 N.W.2d 46 (1962); Peter Kiewit Sons' Co. v. Iowa S. Utils. Co., 355 F. Supp. 376, 397 (S.D. Iowa 1973)

Source: https://law.justia.com/cases/iowa/supreme-court/1962/50601-0.html

Cunningham Bros. is the controlling Iowa Supreme Court decision. Peter Kiewit is a federal district court decision applying Iowa law. Its definition of active interference, an affirmative willful act in bad faith, was the standard other states worked from for years. Construction law treatises quote it in those terms, along with the point that a simple mistake, an error in judgment, a lack of total effort or a lack of complete diligence is not enough. No free full-text copy of the opinion is available online.

Construction contract filing deadline

10 years for a written contract claim

Iowa's limitations period for an action founded on a written contract is 10 years from accrual, covering an ordinary written construction-contract claim. Two deadlines sit in front of that one on most construction claims. A mechanic's lien and a payment bond claim each run on their own, far shorter clock, counted from last furnishing rather than from breach and missing either one removes the security while leaving the contract claim alive but unsecured. Check those dates first. Accrual is the other half of the question: the period runs from breach, which on a payment dispute is usually the date payment came due rather than the date the work was done.

Citation: Iowa Code § 614.1(5)(a)

Source: https://law.justia.com/codes/iowa/title-xv/chapter-614/section-614-1/

Statute of repose on improvements to real property

10 years for residential construction, 8 years for every other improvement. It can bar a claim before the 10-year contract deadline above has run

Separately from the limitations period for a contract claim, Iowa sets an outer bar measured from the defendant's act or omission rather than from accrual or discovery. For an action arising from or related to residential construction, as that term is defined in section 572.1, the period is 10 years. For any other kind of improvement to real property it is 8 years. Where the action arises from intentional misconduct or fraudulent concealment of an unsafe or defective condition, the period is 15 years from the act or omission. If the unsafe or defective condition is discovered within one year before the applicable period expires, that period is extended by one year. The subsection does not bar an action against a person solely in the capacity of owner, occupant or operator of the improvement.

The 8-year and 10-year periods came in by amendment effective 1 July 2017 and do not reach backwards. They do not apply to an improvement to real property already in existence before that date, nor to an improvement that was the subject of a binding agreement as of that date, whether or not construction had begun. Work predating the amendment runs on the prior 15-year regime.

Citation: Iowa Code § 614.1(11)

Source: https://www.legis.iowa.gov/docs/code/614.1.pdf

Read this against the 10-year written-contract deadline in the entry above, because the two run on different clocks and the shorter one controls. A defect in a commercial improvement is barred 8 years after the act or omission even where the contract claim accrued later or the defect surfaced later. A claimant working only from the contract limitations period will reach the wrong answer on a commercial project. The date that starts the repose clock is the defendant's act or omission. It is not substantial completion, not acceptance and not discovery.

Retainage on public improvements

3% maximum since 1 July 2025, reduced from 5%; private projects have no statutory cap at all

Senate File 574, signed 25 April 2025 and effective 1 July 2025, amended Iowa Code §§ 573.12 and 573.13 to lower the maximum a public owner may retain from each monthly payment to the principal contractor from 5% to 3%. The principal contractor may in turn withhold from a subcontractor the lesser of 3% or the retainage amount stated in the subcontract. The retained fund is held for 30 days after completion and final acceptance of the improvement; if claims are on file at the end of that period, the public corporation continues to hold a sum equal to double the total of all claims on file and releases the balance.

Iowa has no retainage statute for private construction. On private work the percentage, the conditions for release and the timing are whatever the contract says.

Citation: Iowa Code §§ 573.12(1)(a), 573.12(1)(b), 573.13, 573.14(1); 2025 Acts, ch. 29, §§ 1, 2 (S.F. 574)

Source: https://www.legis.iowa.gov/docs/code/2026/573.html

Commonly misstated. Most national lien and retainage reference sites still publish 5% for Iowa. Any source that has not been revised since July 2025 is out of date on this number and the figure is old enough now to have been copied forward into contract templates.

Early release of retainage: settled by the Iowa Supreme Court in 2024

Retainage cannot be released before the project is completed, finally accepted and a further thirty days have passed. A contractor cannot reach it earlier by bonding off a subcontractor's claim

Chapter 573 sets several rights that pull against each other. A public owner must keep holding retainage in double the amount of any claim a subcontractor has filed. It may also keep holding double the value of work still incomplete. Against those, a principal contractor may serve a thirty-day demand requiring a claimant to sue and may then post a bond in double the amount of that claim to have the corresponding retainage released. Whether the bond-off route could be used before the project finished was litigated to the Iowa Supreme Court.

The Court held that it cannot. Reading section 573.16 as a whole, the timing restriction in subsection (1) governs subsection (2) as well, so neither a lawsuit over distribution of the retainage nor the contractor's post-lawsuit bonding off can occur until the project is complete, finally accepted. The subcontractors have had their thirty-day post-acceptance window to file claims. The Court vacated a contrary Court of Appeals decision and affirmed the district court. The practical rule for a contractor budgeting cash flow is that retainage on an Iowa public improvement is not reachable early and a bond posted before completion will not force its release.

Citation: Iowa Code §§ 573.14(1), 573.16(1), 573.16(2), 573.28(2)(c); Charles L. Smith, Trustee in Bankruptcy of Metro Concrete, Inc., No. 22-2098 (Iowa, Dec. 2024)

Source: https://www.iowacourts.gov/courtcases/19675/embed/SupremeCourtOpinion

Commonly misstated. Guidance published before 2019 locates the early-release procedure at Iowa Code § 26.13. That section was repealed by 2018 Iowa Acts ch. 1097 and the procedure was relocated to § 573.28. Material citing § 26.13 as current law, including some still-published municipal guidance, is describing a statute that has not been in force since 2018. Commentary written before December 2024 also describes the bond-off timing question as open; it is not.

Does the 3% cap reach contracts signed before 1 July 2025?

Unresolved: no transition provision was located and Iowa construction counsel are advising owners to take legal advice on existing contracts rather than assuming an answer

Position A: the cap applies going forward to payments made after the effective date. Sections 573.12 and 573.13 speak to what an owner may retain from each monthly payment. On that reading the constraint attaches to the payment, so monthly payments made on or after 1 July 2025 are capped at 3% regardless of when the contract was signed.

Position B: contracts already in place run on the terms they were made under. A contract executed while 5% was lawful priced and allocated risk on that basis and nothing located in S.F. 574 expressly reaches back to existing agreements.

Iowa construction counsel publishing on the amendment stopped short of resolving this and advised governmental bodies to consult legal counsel on applicability to existing public improvement contracts. Treat it as genuinely open. If you are budgeting a claim on a contract signed before July 2025, the safer course is to model both and identify which one the owner is actually applying on your payment applications.

Mechanic's lien: statewide registry and the deadlines that matter

Posted to the Secretary of State's online registry rather than a county recorder; 90 days for a lien at full strength and two years from the expiration of that 90 days to sue

Iowa liens are posted to the Mechanics' Notice and Lien Registry, a statewide online system administered by the Secretary of State. There is no county recorder step. Posting within 90 days after the last labor or materials preserves full rights against the owner. A later posting is not void and chapter 572 permits it well past 90 days, but § 572.11 limits a late lien to the balance the owner still owes the general contractor at the time notice is served, so a late lien on a fully paid-out job recovers nothing.

Any action to enforce the lien must be brought within two years from the expiration of the ninety days after the date the last material was furnished or the last labor performed. An owner, the owner's agent or the contractor may cut that short by serving written demand that the claimant commence suit; failure to sue within thirty days of that demand forfeits the lien and all benefits derived from it.

Residential work runs a second notice track. The general contractor or owner-builder posts a notice of commencement to the registry within 10 days of starting work. A subcontractor posts a preliminary notice and that deadline is not a day count at all. It runs until the owner finishes paying the general contractor. A subcontractor assuming a fixed number of days can lose lien rights entirely without ever missing a calendar date.

Citation: Iowa Code §§ 572.8, 572.11, 572.13A, 572.13B, 572.27, 572.28(1)

Source: https://www.legis.iowa.gov/docs/code/572.27.pdf

Commonly misstated. Some lien-service references give one year from the 90-day deadline as the time to sue. Section 572.27 says two years from the expiration of the ninety days and the statutory text is unambiguous. The 30-day forfeiture on written demand under § 572.28(1) is the deadline that actually catches people out, because it can arrive at any point and is far shorter than either figure.

Prompt payment on public projects

Final payment within 40 days of acceptance, extendable by contract to 50; subcontractors within 7 days of the contractor being paid; progress payments carry interest after 14 days

Chapter 573 sets the payment timetable on public improvements. Final payment is due within 40 days after the work is completed, accepted and the required certifications furnished, which the contract may extend to a maximum of 50 days; after that, interest accrues to the unpaid party. Progress payments run on a shorter clock: interest accrues on an approved progress payment left unpaid for 14 days, which the contract may extend to no more than 30. Once the contractor is paid, a progress or final payment to a subcontractor is due within 7 days, or within a reasonable time where the delay is not that subcontractor's fault. If the contractor receives an interest payment, it must pass the subcontractor a proportional share.

Citation: Iowa Code §§ 573.12(2)(a), 573.12(2)(b), 573.12(3)(a), 573.14(2), 573.21, 573.28(2)(e)

Source: https://www.legis.iowa.gov/docs/ico/chapter/573.pdf

On the lower tiers. Practitioner summaries commonly describe the 7-day duty as reaching first-tier subcontractors only. The statute does not say that. Section 573.12(2)(b) speaks of payment to "a subcontractor" without limiting the tier and for retained funds § 573.28(2)(e) is explicit that each subcontractor shall pass through to each lower-tier subcontractor all retained fund payments received. A lower-tier claimant should not be talked out of the deadline by a summary.

State unemployment insurance (SUTA)

New non-construction employer rate is 1.000% (Rank 4); new CONSTRUCTION employers pay 5.400% (Rank 9), more than 5x the general rate. 2026 taxable wage base is $20,400, a dramatic drop from $39,500 in 2025 following a major legislative overhaul (Senate File 607).

Iowa simplified its unemployment insurance tax system in 2025 legislation. The wage base formula changed from two thirds to one third of the state average annual wage, which cut the 2026 wage base nearly in half and the maximum rate dropped from 9% to 5.4%.

Citation: Iowa Workforce Development (IWD).

Source: https://workforce.iowa.gov/employers/unemployment-insurance/unemployment-insurance-employer-handbook/unemployment-insurance-taxes

Last checked: 2026-08-26

Construction employers pay the 5.400% new employer rate, more than five times the general rate, so do not use a general Iowa figure for a construction payroll.

Workers' compensation rating

Iowa uses NCCI advisory rates rather than its own rating bureau.

Iowa follows the standard NCCI advisory-rate model, with NCCI developing loss costs and classifications that are filed with the Iowa Insurance Division for approval. Workplace safety and claims disputes are handled separately by the Iowa Division of Workers' Compensation within the Department of Inspections, Appeals and Licensing (DIAL).

Citation: NCCI Iowa State Advisory Forum, Iowa Insurance Division

Source: https://www.ncci.com/Articles/Pages/II_StateAdvisoryForumState_IA.aspx?state=Iowa

Prevailing wage law

Iowa has no state prevailing-wage law for public construction contracts.

Iowa does not currently have a Little Davis-Bacon statute on its books requiring state-mandated prevailing wages on state or local public construction contracts. Public construction let by Iowa state or local agencies is governed only by the federal Davis-Bacon Act and only when federal funds are involved.

Citation: U.S. Department of Labor state prevailing wage summary

Source: https://www.dol.gov/agencies/whd/state/prevailing-wages

Comparative / contributory negligence rule

Modified comparative fault, recovery barred above 50% fault (51% bar)

Recovery is reduced in proportion to fault and barred once the worker is more than 50% at fault. A worker exactly 50% at fault still recovers half. The statutory test is not a bare 50% line: section 668.3(1)(a) bars recovery only where the claimant bears a greater percentage of fault than the combined percentage attributed to the defendants, the third-party defendants and any person released under section 668.7. On a multi-party site that distinction does real work, because the share allocated to a party who has already settled out counts on the defence side of that comparison rather than against the worker.

Citation: Iowa Code § 668.3(1)(a) (general claims); § 668.3(1)(b) (loss of consortium, services, companionship or society); § 668.7 (released parties)

Source: https://law.justia.com/codes/iowa/title-xv/chapter-668/section-668-3/

Verified against: statute text of Iowa Code s 668.3, read 11 September 2026

Non-economic damages cap

No general cap on non-economic damages

Most states cap non-economic damages only in medical malpractice actions, which does not reach a third-party construction claim. Economic losses, medical bills, lost wages, future earning capacity, are not capped by these statutes.

OSHA plan

Federal OSHA (no state plan)

Iowa has no OSHA-approved state plan; both public and private employers fall under federal OSHA jurisdiction. Under federal jurisdiction the citation is issued by an OSHA area office and contested before the federal Occupational Safety and Health Review Commission. Federal OSHA does not cover state and local government employees, so a public employee injured on a public job falls outside it. Reporting deadlines are a work-related fatality within 8 hours, an inpatient hospitalisation, amputation or loss of an eye within 24 hours. For a construction claim the inspection file matters more than the citation: photographs, measurements, witness statements and the inspector's narrative are usually obtainable and are often the best contemporaneous record of the site.

Citation: 29 U.S.C. § 667 (State Plan roster)

Source: https://www.osha.gov/stateplans/ia

Weight of an OSHA violation in a negligence case

Iowa is a split-rule state: pure negligence per se applies when the plaintiff is the defendant's own employee, but OSHA violations are merely some evidence of negligence when the parties lack a genuine employment relationship.

The Iowa Supreme Court held that an employer's violation of an OSHA standard constitutes negligence per se in an action by an employee against that employer. Where a worker was killed by a truck operated by a company for whom the worker did not work, however, the same court held the truck operator's OSHA violation was only evidence of negligence, not negligence per se. Iowa applies a stricter rule for genuine employer-employee relationships than for third parties.

Citation: Koll v. Manatt's Transp. Co., 253 N.W.2d 265, 270 (Iowa 1977); Wiersgalla v. Garrett, 486 N.W.2d 290, 293 (Iowa 1992) (evidence only, non-employment relationship).

Source: https://storage.googleapis.com/jnl-bcls-j-bclr-files/journals/1/articles/232/63a30c0a100a2.pdf

Third-party contribution against the employer

Iowa does not give a general contractor automatic statutory-employer immunity, so check that question first.

Third-party claims turn on control, premises notice, negligent undertaking, product defect and contractual indemnity.

Citation: Iowa Code ch. 85; Walker v. Mlakar, 489 N.W.2d 401 (Iowa 1992).

Source: https://law.justia.com/cases/iowa/supreme-court/1992/

Injury-severity gate on contribution claims

Unusually broad immunity: Iowa gives the employer blanket immunity with no intentional-tort exception. A narrower gross-negligence route runs only against a co-employee.

Harned v. Farmland Foods, Inc. holds that Iowa Code § 85.20 gives the employer blanket immunity with no intentional-tort exception, which puts Iowa in a small minority of states. A separate path under § 85.20(2) allows a suit against a co-employee, not the employer, for gross negligence amounting to wanton neglect under the demanding Thompson v. Bohlken standard. In practice exclusivity takes the direct employer off the tort table entirely, whatever the OSHA file shows. The claim runs against the other parties on the site: the general contractor, the owner, another subcontractor, an equipment manufacturer. The employer or its carrier then asserts a lien against whatever the worker recovers from those parties, so the figure the worker actually keeps is the recovery less the lien, the fee and the costs. Whether the lien is reduced for the cost of obtaining the recovery is a separate state question worth asking early, because it moves the net more than most people expect.

Citation: Iowa Code ch. 85, § 85.20; Harned v. Farmland Foods, Inc., 331 N.W.2d 98 (Iowa 1983).

Source: https://www.iowacourts.gov/courtcases/20943/briefs/7150/embedBrief

Distinctive state doctrine

No automatic statutory-employer immunity for a general contractor, which makes Iowa an outlier

Iowa does not extend automatic exclusive-remedy immunity to a general contractor facing a suit by a subcontractor's injured employee. In Woodruff Construction Co. v. Barrick Roofers, Inc. a subcontractor employee's negligence suit against the general contractor proceeded without a statutory-employer defense barring it. Most states extend some form of statutory-employer immunity up the contractor chain and Iowa generally does not. An earlier version of this entry cited Iowa Code § 85.71 for a general contractor upstream liability rule; that section governs injuries occurring outside the state and has been removed.

Citation: Woodruff Constr. Co. v. Barrick Roofers, Inc., 406 N.W.2d 783 (Iowa 1987); Iowa Code § 85.71 (current text, 'Injury outside of state' (corrects the earlier miscitation))

Source: https://law.justia.com/codes/iowa/title-iii/chapter-85/