H.B. 357

1

MECHANICS LIEN AMENDMENTS
2 2007 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Gage Froerer
5 Senate Sponsor: ____________
6
7 LONG TITLE
8 General Description:
9 This bill makes changes to mechanics' lien provisions.
10 Highlighted Provisions:
11 This bill:
12 . addresses the time for filing a notice of a lien;
13 . addresses information and forms required to be provided to the owner of a residence
14 that is the subject of an action to enforce a lien; and
15 . makes technical changes.
16 Monies Appropriated in this Bill:
17 None
18 Other Special Clauses:
19 None
20 Utah Code Sections Affected:
21 AMENDS:
22 38-1-7, as last amended by Chapters 205 and 297, Laws of Utah 2006
23 38-1-11, as last amended by Chapter 297, Laws of Utah 2006
24 38-1-25, as last amended by Chapter 257, Laws of Utah 2001
25 38-1-33, as last amended by Chapter 297, Laws of Utah 2006
26
27 Be it enacted by the Legislature of the state of Utah:

28 Section 1. Section 38-1-7 is amended to read:
29 38-1-7. Notice of claim -- Contents -- Recording -- Service on owner of property.
30 (1) (a) (i) Except as modified in [Section] Sections 38-1-27 and 38-1-33 , a person
31 claiming benefits under this chapter shall file for record with the county recorder of the county
32 in which the property, or some part of the property, is situated, a written notice to hold and
33 claim a lien within [90]:
34 (A) 180 days after the [date of] day on which occurs final completion of the original
35 contract under which the claimant claims a lien under this chapter[.]; or
36 (B) 90 days after the day on which a notice of completion is filed under Section
37 38-1-33 .
38 (ii) For purposes of this Subsection (1), final completion of the original contract
39 means:
40 (A) if as a result of work performed under the original contract a permanent certificate
41 of occupancy is required for the work, the date of issuance of a permanent certificate of
42 occupancy by the local government entity having jurisdiction over the construction project;
43 (B) if no certificate of occupancy is required by the local government entity having
44 jurisdiction over the construction project, but as a result of the work performed under the
45 original contract an inspection is required as per state-adopted building codes for the work, the
46 date of the final inspection for the work by the local government entity having jurisdiction over
47 the construction project; or
48 (C) if with regard to work performed under the original contract no certificate of
49 occupancy and no final inspection are required as per state-adopted building codes by the local
50 government entity having jurisdiction over the construction project, the date on which there
51 remains no substantial work to be completed to finish the work on the original contract.
52 (b) Notwithstanding Section 38-1-2 , where a subcontractor performs substantial work
53 after the applicable dates established by Subsections (1)(a)(ii)(A) and (B), that subcontractor's
54 subcontract shall be considered an original contract for the sole purpose of determining:
55 (i) the subcontractor's time frame to file a notice of intent to hold and claim a lien
56 under this Subsection (1); and
57 (ii) the original contractor's time frame to file a notice of intent to hold and claim a lien
58 under this Subsection (1) for that subcontractor's work.

59 (c) For purposes of this section, the term "substantial work" does not include:
60 (i) repair work; or
61 (ii) warranty work.
62 (d) Notwithstanding Subsection (1)(a)(ii), final completion of the original contract does
63 not occur if work remains to be completed for which the owner is holding payment to ensure
64 completion of that work.
65 (2) (a) The notice required by Subsection (1) shall contain a statement setting forth:
66 (i) the name of the reputed owner if known or, if not known, the name of the record
67 owner;
68 (ii) the name of the person:
69 (A) by whom the lien claimant was employed; or
70 (B) to whom the lien claimant furnished the equipment or material;
71 (iii) the time when:
72 (A) the first and last labor or service was performed; or
73 (B) the first and last equipment or material was furnished;
74 (iv) a description of the property, sufficient for identification;
75 (v) the name, current address, and current phone number of the lien claimant;
76 (vi) the amount of the lien claim;
77 (vii) the signature of the lien claimant or the lien claimant's authorized agent;
78 (viii) an acknowledgment or certificate as required under Title 57, Chapter 3,
79 Recording of Documents; and
80 (ix) if the lien is on an owner-occupied residence, as defined in Section 38-11-102 , a
81 statement describing what steps an owner, as defined in Section 38-11-102 , may take to require
82 a lien claimant to remove the lien in accordance with Section 38-11-107 .
83 (b) Substantial compliance with the requirements of this chapter is sufficient to hold
84 and claim a lien.
85 (3) (a) Within 30 days after filing the notice of lien, the lien claimant shall deliver or
86 mail by certified mail a copy of the notice of lien to:
87 (i) the reputed owner of the real property; or
88 (ii) the record owner of the real property.
89 (b) If the record owner's current address is not readily available to the lien claimant, the

90 copy of the claim may be mailed to the last-known address of the record owner, using the
91 names and addresses appearing on the last completed real property assessment rolls of the
92 county where the affected property is located.
93 (c) Failure to deliver or mail the notice of lien to the reputed owner or record owner
94 precludes the lien claimant from an award of costs and attorneys' fees against the reputed
95 owner or record owner in an action to enforce the lien.
96 (4) The Division of Occupational and Professional Licensing shall make rules
97 governing the form of the statement required under Subsection (2)(a)(ix).
98 Section 2. Section 38-1-11 is amended to read:
99 38-1-11. Enforcement -- Time for -- Lis pendens -- Action for debt not affected --
100 Instructions and form affidavit and motion.
101 (1) As used in this section:
102 (a) "Owner" is as defined in Section 38-11-102 .
103 (b) "Residence" is as defined in Section 38-11-102 .
104 [(1)] (2) A lien claimant shall file an action to enforce the lien filed under this chapter
105 within 180 days from the day on which the lien claimant filed a notice of claim under Section
106 38-1-7 .
107 [(2)] (3) (a) Within the time period provided for filing in Subsection [(1)] (2) the lien
108 claimant shall file for record with the county recorder of each county in which the lien is
109 recorded a notice of the pendency of the action, in the manner provided in actions affecting the
110 title or right to possession of real property, or the lien shall be void, except as to persons who
111 have been made parties to the action and persons having actual knowledge of the
112 commencement of the action.
113 (b) The burden of proof [shall be] is upon the lien claimant and those claiming under
114 the lien claimant to show actual knowledge under Subsection (3)(a).
115 [(3)] (4) (a) A lien filed under this chapter is automatically and immediately void if an
116 action to enforce the lien is not filed within the time required by this section [ 38-1-11 ].
117 (b) Notwithstanding Section 78-12-40 , a court has no subject matter jurisdiction to
118 adjudicate a lien that becomes void under Subsection [(3)] (4)(a).
119 [(4)] (5) This section may not be interpreted to impair or affect the right of any person
120 to whom a debt may be due for any work done or materials furnished to maintain a personal

121 action to recover the [same] debt.
122 [(5)] (6) (a) If a lien claimant files an action to enforce a lien filed under this chapter
123 involving a residence, [as defined in Section 38-11-102 ,] the lien claimant shall include with
124 the service of the complaint on the owner of the residence:
125 (i) instructions to the owner of the residence relating to the owner's rights under Title
126 38, Chapter 11, Residence Lien Restriction and Lien Recovery Fund Act; and
127 (ii) a form [affidavit] to enable the owner of the residence to specify the grounds upon
128 which the owner may exercise available rights under Title 38, Chapter 11, Residence Lien
129 Restriction and Lien Recovery Fund Act.
130 (b) The instructions and form [affidavit] required by Subsection [(5)] (6)(a) shall meet
131 the requirements established by rule by the Division of Occupational and Professional
132 Licensing in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
133 (c) If a lien claimant fails to provide to the owner of the residence the instructions and
134 form [affidavit] required by Subsection [(5)] (6)(a), the lien claimant shall be barred from
135 maintaining or enforcing the lien upon the residence.
136 (d) Judicial determination of the rights and liabilities of the owner of the residence
137 under this chapter and Title 38, [Chapters 1 and] Chapter 11, Residence Lien Restriction and
138 Lien Recovery Fund Act, and Title 14, Chapter 2, Private Contracts, shall be stayed until after
139 the owner [has been] is given a reasonable period of time to establish compliance with
140 Subsections 38-11-204 (4)(a) and (4)(b) through an informal proceeding, as set forth in Title 63,
141 Chapter 46b, Administrative Procedures Act, commenced within 30 days of the owner being
142 served summons in the foreclosure action, at the Division of Occupational and Professional
143 Licensing and obtain a certificate of compliance or denial of certificate of compliance, as
144 defined in Section 38-11-102 .
145 (e) An owner applying for a certificate of compliance under Subsection [(5)] (6)(d)
146 shall send by certified mail to all lien claimants:
147 (i) a copy of the application for a certificate of compliance; and
148 (ii) all materials filed in connection with the application.
149 (f) The Division of Occupational and Professional Licensing shall notify all lien
150 claimants listed in an owner's application for a certificate of compliance under Subsection [(5)]
151 (6)(d) of the issuance or denial of a certificate of compliance.

152 [(6)] (7) The written notice requirement applies to liens filed on or after July 1, 2004.
153 Section 3. Section 38-1-25 is amended to read:
154 38-1-25. Abuse of lien right -- Penalty.
155 (1) Any person entitled to record or file a lien under Section 38-1-3 is guilty of a class
156 B misdemeanor who intentionally causes a claim of lien against any property[, which contains]
157 containing a greater demand than the sum due to be recorded or filed:
158 (a) with the intent to cloud the title;
159 (b) to exact from the owner or person liable by means of the excessive claim of lien
160 more than is due; or
161 (c) to procure any unjustified advantage or benefit.
162 (2) In addition to any criminal penalties under Subsection (1), a person who violates
163 Subsection (1) is liable to the owner of the property or an original contractor or subcontractor
164 who is affected by the lien for the greater of:
165 (a) twice the amount by which the [wrongful] lien exceeds the amount actually due; or
166 (b) the actual damages incurred by the owner of the property.
167 Section 4. Section 38-1-33 is amended to read:
168 38-1-33. Notice of completion.
169 (1) (a) (i) Upon final completion of a construction project:
170 (A) an owner of a construction project or an original contractor may file a notice of
171 completion with the database; and
172 (B) a lender that has provided financing for the construction project, a surety that has
173 provided bonding for the construction project, or a title company issuing a policy on the
174 construction project, may file a notice of completion.
175 (ii) Final completion, for purposes of this Subsection (1), [shall mean] means:
176 (A) if as a result of work performed under the original contract a permanent certificate
177 of occupancy is required for such work, the date of issuance of a permanent certificate of
178 occupancy by the local government entity having jurisdiction over the construction project;
179 (B) if no certificate of occupancy is required by the local government entity having
180 jurisdiction over the construction project, but as a result of the work performed under the
181 original contract an inspection is required for such work, the date of the final inspection for
182 such work by the local government entity having jurisdiction over the construction project; or

183 (C) if with regard to the work performed under the original contract no certificate of
184 occupancy and no final inspection are required by the local government entity having
185 jurisdiction over the construction project, the date on which there remains no substantial work
186 to be completed to finish such work on the original contract.
187 (b) Notwithstanding Section 38-1-2 , where a subcontractor performs substantial work
188 after the applicable dates established by Subsections (1)(a)(i) and (ii), that subcontractor's
189 subcontract shall be considered an original contract for the sole purpose of determining:
190 (i) the subcontractor's time frame to file a notice to hold and claim a lien under
191 Subsection 38-1-7 (1); and
192 (ii) the original contractor's time frame to file a notice to hold and claim a lien under
193 Subsection 38-1-7 (1) for that subcontractor's work.
194 (c) For purposes of this section, the term "substantial work" does not include:
195 (i) repair work; or
196 (ii) warranty work.
197 (d) A notice of completion shall include:
198 (i) the building permit number for the project, or the number assigned to the project by
199 the designated agent;
200 (ii) the name, address, and telephone number of the person filing the notice of
201 completion;
202 (iii) the name of the original contractor for the project;
203 (iv) the address of the project or a description of the location of the project;
204 (v) the date on which final completion is alleged to have occurred; and
205 (vi) the method used to determine final completion.
206 (e) Notwithstanding Subsection (1)(a)(ii), final completion of the original contract does
207 not occur if work remains to be completed for which the owner is holding payment to ensure
208 completion of the work.
209 (f) (i) Unless a person indicates to the division or designated agent that the person does
210 not wish to receive a notice under this section, electronic notification of the filing of a notice of
211 completion or alternate notice as prescribed in Subsection (1)(a), shall be provided to:
212 (A) each person that filed a notice of commencement for the project;
213 (B) each person that filed preliminary notice for the project; and

214 (C) all interested persons who have requested notice for the project.
215 (ii) A person to whom notice is required under this Subsection (1)(f) is responsible for:
216 (A) providing an e-mail address, mailing address, or telefax number to which a notice
217 required by this Subsection (1)(f) is to be sent; and
218 (B) the accuracy of any e-mail address, mailing address, or telefax number to which
219 notice is to be sent.
220 (iii) The designated agent fulfills the notice requirement of Subsection (1)(f)(i) when it
221 sends the notice to the e-mail address, mailing address, or telefax number provided to the
222 designated agent, whether or not the notice is actually received.
223 (iv) Upon the filing of a notice of completion, the time periods for filing preliminary
224 notices stated in Section 38-1-27 are modified such that all preliminary notices shall be filed
225 subsequent to the notice of completion and within ten days from the day on which the notice of
226 completion is filed.
227 (g) A subcontract that is considered an original contract for purposes of this section
228 [shall] does not create a requirement for an additional preliminary notice if a preliminary notice
229 has already been given for the labor, service, equipment, and material furnished to the
230 subcontractor who performs substantial work.
231 (2) (a) If a construction project owner, original contractor, subcontractor, or other
232 interested person believes that a notice of completion has been filed erroneously, that owner,
233 original contractor, subcontractor, or other interested person [can] may request from the person
234 who filed the notice of completion evidence establishing the validity of the notice of
235 completion.
236 (b) Within ten days after the request described in Subsection (2)(a), the person that
237 filed the notice of completion shall provide the requesting person proof that the notice of
238 completion is valid.
239 (c) If the person that filed the notice of completion does not provide proof of the
240 validity of the notice of completion, that person shall immediately cancel the notice of
241 completion from the database in any manner prescribed by the division pursuant to rule.
242 [(3) Notwithstanding Subsection 38-1-7 (1)(a)(i), a person claiming benefits under this
243 chapter shall file for record with the county recorder of the county in which the property, or
244 some part of the property is situated, a written notice to hold and claim a lien within:]

245 [(a) 90 days after the day on which a notice of completion is filed under this section;
246 or]
247 [(b) 180 days after the day on which occurs final completion , if no notice of
248 completion is filed under this section.]
249 [(4)] (3) A person filing a notice of completion by alternate filing is responsible for
250 verifying and changing any incorrect information in the notice of completion before the
251 expiration of the time period during which the notice is required to be filed.




Legislative Review Note
as of 1-24-07 8:09 AM

Office of Legislative Research and General Counsel