H.B. 32

This document includes Senate Committee Amendments incorporated into the bill on Wed, Jan 28, 2004 at 2:39 PM by smaeser. --> This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Fri, Feb 6, 2004 at 11:31 AM by rday. --> This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Fri, Feb 6, 2004 at 11:32 AM by rday. --> This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Fri, Feb 6, 2004 at 11:33 AM by rday. --> This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Fri, Feb 6, 2004 at 11:35 AM by rday. --> 1

LIEN AMENDMENTS
2 2004 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Michael T. Morley
5
6 LONG TITLE
7 General Description:
8 This bill modifies the title on liens to modify filing requirements and definitions.
9 Highlighted Provisions:
10 This bill:
11 . amends the timing requirement for filing a notice of a claim for a lien;
12 . provides that the lien amount be included in a notice of claim;
13 . provides that substantial compliance with content requirements for a notice of claim
14 is sufficient to hold and claim a lien;
15 . amends the timing requirements to file an action to enforce a lien;
16 S [ . amends the definition of resident construction for purposes of the preliminary
17 notices; ] s
18 . amends the definition provisions of the Residence Lien Restriction and Lien
19 Recovery Fund Act; and
20 . makes technical changes.
21 Monies Appropriated in this Bill:
22 None
23 Other Special Clauses:
24 None
25 Utah Code Sections Affected:
26 AMENDS:
27 38-1-7, as last amended by Chapter 223, Laws of Utah 1999

28 38-1-11, as last amended by Chapter 198, Laws of Utah 2001
29 38-1-27, as last amended by Chapter 229, Laws of Utah 2001
30 38-11-102, as last amended by Chapter 198, Laws of Utah 2001
31
32 Be it enacted by the Legislature of the state of Utah:
33 Section 1. Section 38-1-7 is amended to read:
34 38-1-7. Notice of claim -- Contents -- Recording -- Service on owner of property.
35 (1) S (a) s A person claiming benefits under this chapter shall file for record with the county
36 recorder of the county in which the property, or some part of the property, is situated, a written
37 notice to hold and claim a lien within 90 days from the date[: (a) the person last performed
38 labor or service or last furnished equipment or material on a project or improvement for a
39 residence as defined in Section 38-11-102 ; or (b)] of final completion of [an] the original
40 contract [not involving a residence as defined in Section 38-11-102 ] S UNDER WHICH THE
40a CLAIMANT CLAIMS A LIEN UNDER THIS CHAPTER s . For purposes of this
41 Subsection (1), final completion of the original contract means:
42 S [ (a) ] (i) IF AS A RESULT OF WORK PERFORMED UNDER THE ORIGINAL CONTRACT A
42a PERMANENT CERTIFICATE OF OCCUPANCY IS REQUIRED FOR SUCH WORK, s the date of issuance
42b of a permanent certificate of occupancy by the local
43 government entity having jurisdiction over the construction project;
44 S [ (b) ] (ii) s if no certificate of occupancy is required S [ for the construction project ] s by the local
45 government entity having jurisdiction over the construction project, S BUT AS A RESULT OF THE
45a WORK PERFORMED UNDER THE ORIGINAL CONTRACT AN INSPECTION IS REQUIRED FOR SUCH
45b WORK, s the date of the final
46 inspection S FOR SUCH WORK s by the local government entity having jurisdiction over the
46a construction project; or
47 S [ (c) ] (iii) s if S WITH REGARD TO WORK PERFORMED UNDER THE ORIGINAL CONTRACT s no
47a certificate of occupancy S [ is required ] s and no final inspection S [ is conducted ] ARE
47b REQUIRED s by the
48 local government entity having jurisdiction over the construction project, the date on which
49 there remains no substantial work to be completed to finish S [ the ] SUCH s work on the
49a S [ construction
50 project ] ORIGINAL CONTRACT s .

50a S (b) NOTWITHSTANDING SECTION 38-1-2, WHERE A SUBCONTRACTOR PERFORMS
50b SUBSTANTIAL WORK AFTER THE APPLICABLE DATES ESTABLISHED BY SUBSECTION (1)(a)(i)

50c S AND (ii), THAT SUBCONTRACTOR'S SUBCONTRACT SHALL BE CONSIDERED AN s
50d ORIGINAL CONTRACT FOR THE SOLE PURPOSE OF DETERMINING:
50e (i) THE SUBCONTRACTOR'S TIME FRAME TO FILE A NOTICE OF INTENT TO HOLD AND
50f CLAIM A LIEN UNDER SUBSECTION (1); AND
50g (ii) THE ORIGINAL CONTRACTOR'S TIME FRAME TO FILE A NOTICE OF INTENT TO HOLD
50h AND CLAIM A LIEN UNDER SUBSECTION (1) FOR THAT SUBCONTRACTOR'S WORK.
50i (c) FOR PURPOSES OF THIS SECTION, THE TERM "SUBSTANTIAL WORK" DOES NOT
50j INCLUDE:
50k (i) REPAIR WORK;
50l (ii) WARRANTY WORK; OR
50m (iii) WORK FOR WHICH THE PROJECT OWNER IS NOT HOLDING PAYMENT TO ENSURE
50n COMPLETION OF THAT WORK. s
51 (2) (a) The notice required by Subsection (1) shall contain a statement setting forth:
52 [(a)] (i) the name of the reputed owner if known or, if not known, the name of the
53 record owner;
54 [(b)] (ii) the name of the person:
55 (A) by whom the lien claimant was employed; or
56 (B) to whom the lien claimant furnished the equipment or material;
57 [(c)] (iii) the time when:
58 (A) the first and last labor or service was performed; or

59 (B) the first and last equipment or material was furnished;
60 [(d)] (iv) a description of the property, sufficient for identification;
61 [(e)] (v) the name, current address, and current phone number of the lien claimant;
62 (vi) the amount of the lien claim;
63 [(f)] (vii) the signature of the lien claimant or the lien claimant's authorized agent;
64 [(g)] (viii) an acknowledgment or certificate as required under Title 57, Chapter 3,
65 Recording of Documents; and
66 [(h)] (ix) if the lien is on an owner-occupied residence, as defined in Section
67 38-11-102 , a statement describing what steps an owner, as defined in Section 38-11-102 , may
68 take to require a lien claimant to remove the lien in accordance with Section 38-11-107 .
69 [(3) Notwithstanding Subsection (2), an acknowledgment or certificate is not required
70 for any notice filed after April 29, 1985, and before April 24, 1989.]
71 (b) Substantial compliance with the requirements of this Subsection (2) is sufficient to
72 hold and claim a lien.
73 [(4)] (3) (a) Within 30 days after filing the notice of lien, the lien claimant shall deliver
74 or mail by certified mail a copy of the notice of lien to:
75 (i) the reputed owner of the real property; or
76 (ii) the record owner of the real property.
77 (b) If the record owner's current address is not readily available to the lien claimant, the
78 copy of the claim may be mailed to the last-known address of the record owner, using the
79 names and addresses appearing on the last completed real property assessment rolls of the
80 county where the affected property is located.
81 (c) Failure to deliver or mail the notice of lien to the reputed owner or record owner
82 precludes the lien claimant from an award of costs and attorneys' fees against the reputed
83 owner or record owner in an action to enforce the lien.
84 [(5)] (4) The Division of Occupational and Professional Licensing shall make rules
85 governing the form of the statement required under Subsection (2)[(h)](a)(ix).
86 Section 2. Section 38-1-11 is amended to read:
87 38-1-11. Enforcement -- Time for -- Lis pendens -- Action for debt not affected --
88 Instructions and form affidavit and motion.
89 (1) A lien claimant shall file an action to enforce the lien filed under this chapter

90 within[: (a) 12 months] 180 days S [ from the date of final completion of the original contract ]
90a FROM THE DAY ON WHICH THE LIEN CLAIMANT FILED A NOTICE OF CLAIM UNDER SECTION 38-1-7 s
90b [not
91 involving a residence as defined in Section 38-11-102 ; or (b) 180 days from the date the lien
92 claimant last performed labor and services or last furnished equipment or material for a
93 residence, as defined in Section 38-11-102 ]. S [ For purposes of this Subsection (1), final
94 completion of the original contract is as defined in Subsection 38-1-7 (1). ] s
95 (2) (a) Within the time period provided for filing in Subsection (1) the lien claimant
96 shall file for record with the county recorder of each county in which the lien is recorded a
97 notice of the pendency of the action, in the manner provided in actions affecting the title or
98 right to possession of real property, or the lien shall be void, except as to persons who have
99 been made parties to the action and persons having actual knowledge of the commencement of
100 the action.
101 (b) The burden of proof shall be upon the lien claimant and those claiming under [him]
102 the lien claimant to show actual knowledge.
103 (3) This section may not be interpreted to impair or affect the right of any person to
104 whom a debt may be due for any work done or materials furnished to maintain a personal
105 action to recover the same.
106 (4) (a) If a lien claimant files an action to enforce a lien filed under this chapter
107 involving a residence, as defined in Section 38-11-102 , the lien claimant shall include with the
108 service of the complaint on the owner of the residence:
109 (i) instructions to the owner of the residence relating to the owner's rights under Title
110 38, Chapter 11, Residence Lien Restriction and Lien Recovery Fund Act; and
111 (ii) a form affidavit and motion for summary judgment to enable the owner of the
112 residence to specify the grounds upon which the owner may exercise available rights under
113 Title 38, Chapter 11, Residence Lien Restriction and Lien Recovery Fund Act.
114 (b) (i) The lien claimant may file a notice to submit for decision on the motion for
115 summary judgment.
116 (ii) The motion for summary judgment may be ruled upon after:
117 (A) the service of the summons and complaint upon the nonpaying party, as defined in
118 Section 38-11-102 [,]; and
119 (B) the time for the nonpaying party to respond, as provided in the Utah Rules of Civil
120 Procedure, has elapsed.

121 (c) The instructions and form affidavit and motion required by Subsection (4)(a) shall
122 meet the requirements established by rule by the Division of Occupational and Professional
123 Licensing in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
124 (d) If the nonpaying party, as defined by Section 38-11-102 , files for bankruptcy
125 protection and there is a bankruptcy stay in effect, the motion for summary judgment and the
126 action to enforce the lien shall be stayed until resolution of the related claim under Title 38,
127 Chapter 11, Residence Lien Restriction and Lien Recovery Fund Act.
128 (e) If a lien claimant fails to provide to the owner of the residence the instructions and
129 form affidavit required by Subsection (4)(a), the lien claimant shall be barred from maintaining
130 or enforcing the lien upon the residence.
131 Section 3. Section 38-1-27 is amended to read:
132 38-1-27. Preliminary notice to original contractor -- Form and contents -- Service
133 -- Notice of commencement of project or improvement.
134 (1) (a) This section relating to preliminary notices does not apply to residential
135 construction or to work performed in the development of subdivisions whose end use is for
136 residential construction.
137 (b) (i) For the purposes of this section, residential construction means:
138 (A) single family detached housing; and
139 (B) multifamily attached housing up to and including [fourplexes, and] S [ duplexes, as
140 defined in Section 38-11-102 ] FOURPLEXES s .
141 (ii) Residential construction includes rental housing.
142 (2) (a) [Except subcontractors who are in privity of contract with an original contractor
143 or except for persons performing labor for wages, any] Any person claiming, reserving the right
144 to claim, or intending to claim a mechanic's lien under this chapter for labor, service,
145 equipment, or material shall provide preliminary notice to the original contractor as prescribed
146 by this section[.] except this Subsection (2) does not apply to:
147 (i) a person who is in privity of contract with an original contractor; or
148 (ii) a person performing labor for wages.
149 (b) Any person who fails to provide [this] the preliminary notice required by this
150 Subsection (2) has no right to claim a mechanic's lien under this chapter.
151 (3) The preliminary notice required by this section:

214 38-11-201 .
215 [(11)] (12) "Laborer" means a person who provides services at the site of the
216 construction on an owner-occupied residence as an employee of an original contractor or other
217 qualified beneficiary performing qualified services on the residence.
218 [(12)] (13) "Licensee" means any holder of a license issued under Title 58, Chapters
219 3a, 22, 53, and 55.
220 [(13)] (14) "Nonpaying party" means the original contractor, subcontractor, or real
221 estate developer who has failed to pay the qualified beneficiary making a claim against the
222 fund.
223 [(14)] (15) "Original contractor" means a person who contracts with the owner of real
224 property or the owner's agent to provide services, labor, or material for the construction of an
225 owner-occupied residence.
226 [(15)] (16) "Owner" means a person who:
227 (a) contracts with a person who is licensed as a contractor or is exempt from licensure
228 under Title 58, Chapter 55, Utah Construction Trades Licensing Act, for the construction on an
229 owner-occupied residence upon real property owned by that person;
230 (b) contracts with a real estate developer to buy a residence upon completion of the
231 construction on the owner-occupied residence; or
232 (c) buys a residence from a real estate developer after completion of the construction
233 on the owner-occupied residence.
234 [(16)] (17) "Owner-occupied residence" means a residence that is, or after completion
235 of the construction on the residence will be, occupied by the owner or the owner's tenant or
236 lessee as a primary or secondary residence within 180 days from the date of the completion of
237 the construction on the residence.
238 [(17)] (18) "Qualified beneficiary" means a person who:
239 (a) provides qualified services;
240 (b) pays all necessary fees or assessment required under this chapter; and
241 (c) registers with the division:
242 (i) as a licensed contractor under Subsection 38-11-301 (1) or (2) if that person seeks
243 recovery from the fund as a licensed contractor; or
244 (ii) as a person providing qualified services other than as a licensed contractor under

245 Subsection 38-11-301 (3) if the person seeks recovery from the fund in a capacity other than as
246 a licensed contractor.
247 [(18)] (19) (a) "Qualified services" means the following performed in construction on
248 an owner-occupied residence:
249 (i) contractor services provided by a contractor licensed or exempt from licensure
250 under Title 58, Chapter 55, Utah Construction Trades Licensing Act;
251 (ii) architectural services provided by an architect licensed under Title 58, Chapter 3a,
252 Architects Licensing Act;
253 (iii) engineering and land surveying services provided by a professional engineer or
254 land surveyor licensed or exempt from licensure under Title 58, Chapter 22, Professional
255 Engineers and Professional Land Surveyors Licensing Act;
256 (iv) landscape architectural services by a landscape architect licensed or exempt from
257 licensure under Title 58, Chapter 53, Landscape Architects Licensing Act;
258 (v) design and specification services of mechanical or other systems;
259 (vi) other services related to the design, drawing, surveying, specification, cost
260 estimation, or other like professional services;
261 (vii) providing materials, supplies, components, or similar products;
262 (viii) renting equipment or materials;
263 (ix) labor at the site of the construction on the owner-occupied residence; and
264 (x) site preparation, set up, and installation of factory built housing.
265 (b) "Qualified services" do not include the construction of factory built housing in the
266 factory.
267 [(19)] (20) "Real estate developer" means a person having an ownership interest in real
268 property who contracts for the construction of a residence that is offered for sale to the public.
269 [(20)] (21) (a) "Residence" means an improvement to real property used or occupied,
270 to be used or occupied as, or in conjunction with[,]:
271 (i) a primary or secondary detached single-family dwelling; or
272 (ii) a multifamily dwelling up to [two units, including] and including duplexes.
273 (b) "Residence" includes factory built housing.
274 [(21)] (22) "Subsequent owner" means a person who purchases a residence from an
275 owner within 180 days from the date of the completion of the construction on the residence.

Legislative Review Note
as of 11-25-03 6:48 AM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel

Interim Committee Note
as of 12-10-03 12:05 PM

The Business and Labor Interim Committee recommended this bill.