Bradley & Riley PC

Iowa Gov. Terry Branstad signed into law new legislation providing that construction contracts and related disputes shall be governed by Iowa law.

On May 1, 2013, Branstad signed House File 211 into law. Under House File 211, any provision in an "in-state construction contract" that by its terms makes the contract subject to the laws of another state (i.e., a choice-of-law provision calling for application of the law of a state other than Iowa) is void and unenforceable. Related, any provision in an in-state construction contract that requires any litigation, mediation or arbitration to be conducted in another state (i.e., a jurisdiction and venue provision requiring disputes to be resolved in a state other than Iowa) is also void and unenforceable. Under House File 211, the laws of the State of Iowa shall apply to every in-state construction contract, and any litigation, mediation or arbitration arising from or relating to such contract must be conducted in Iowa.

An "in-state construction contract" means any contract (whether public, private, foreign or domestic) "relating to construction, alteration, repair, or maintenance of any real property" in Iowa. It includes agreements for "architectural services, demolition, design services, development, engineering services, excavation, or any other improvement to real property in this state, including buildings, shafts, wells, and structures, whether, on, above, or under real property" located in Iowa. However, it does not include an agreement between the State of Iowa and any other state.

This new legislation will take effect on January 1, 2014. House File 211 does not indicate that it applies only to new contracts entered into on or after that date, so presumably the legislature intends that the legislation shall apply to all in-state construction contracts regardless of whether they are made before, on or after January 1, 2014. Whether retroactive application of House File 211 to existing contracts will pass constitutional muster is yet to be seen.

House File 211 can be obtained [here].

Categories: Business Law

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