The Construction Counselor

On July 1, 2025, three laws affecting the construction industry took effect.

The most impactful statutory change was Senate File 574 pertaining to public construction projects. As previously discussed in a prior blog post, Senate File 574 amended Iowa Code Chapter 573 by reducing the maximum retainage on public construction projects from 5% to 3%, among other changes.

Second, as noted in an earlier blog post, Senate File 619 placed further restrictions and compliance requirements on post-lost assignments of benefits for “residential contractors.”

Third is Senate File 460, which amends Iowa Code Chapter 558A (governing the required real estate disclosures) with changes affecting the home inspection industry. Effective July 1, 2025, the bill establishes new requirements for home inspections and home inspectors. Among its provisions, Senate File 460:

• Mandates that independent home inspection reports may only be issued by persons in one of the following groups:
  • A member in good standing of a national home inspectors association (or a person supervised by such member who agrees to be responsible for the contents of any home inspection report produced by the person);
  • A person who holds a license or registration to perform home inspections in another state;
  • An architect licensed pursuant to Chapter 544A; or
  • A professional engineer licensed under Chapter 542B;
• Sets forth standards for what must be included in home inspection reports, including new statutorily mandated disclosure language;
• Sets forth standards for what must not be included in home inspection reports and agreements, including a prohibition against limitation of liability provisions in such agreements;
• Sets forth conflicts of interest that home inspectors must avoid, including prohibiting inspectors (1) from performing or offering to perform repairs for an additional fee regarding a house that the inspector inspected within the last 12 months; (2) delivering or offering to deliver a commission, referral fee or kickback to the seller of the inspected property, a realtor involved in the transaction or other persons, or (3) accepting an engagement where the fee is contingent upon certain conclusions in the report;
• Prohibits home inspectors from providing a report to others without the client’s consent;
• Provides restrictions as to when a home inspector may provide a verbal or written estimate of repair costs;
• Mandates insurance coverage, and
• Sets forth potential civil or criminal penalties for noncompliance.

If you have questions regarding these legislative updates or construction law in general, please contact Jodie McDougal.