H.B. 219 Enrolled

CONSTRUCTION BOND AMENDMENTS
2004 GENERAL SESSION
STATE OF UTAH
Sponsor: Michael T. Morley

LONG TITLE
General Description:
This bill modifies provisions related to private contractors bonds.
Highlighted Provisions:
This bill:
. provides definitions;
. makes the requirement that the owner obtain a bond from the contractor apply only
to commercial contracts;
. increases the contract price amount to $50,000 for requiring the owner to obtain a
bond from the contractor;
. deletes exemption related to the Residence Lien Restriction and Lien Recovery Fund
Act;
. addresses the award of attorneys' fees; and
. makes technical changes.
Monies Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
14-2-1, as last amended by Chapter 308, Laws of Utah 1994
14-2-2, as last amended by Chapter 308, Laws of Utah 1994

Be it enacted by the Legislature of the state of Utah:

Section 1. Section 14-2-1 is amended to read:
14-2-1. Definitions -- Payment bond required -- Right of action -- Attorneys' fees.
(1) For purposes of this chapter:
(a) "Commercial contract" means a contract for the construction, alteration, or repair of
the following if it is not residential construction:
(i) a building;
(ii) a structure; or
(iii) an improvement upon land that is not associated with a single family detached
housing.
[(a)] (b) "Contractor" means any person who is or may be awarded [a] an original
commercial contract for the construction, alteration, or repair of any building, structure, or
improvement upon land.
[(b)] (c) "Owner" means any person contracting with the original contractor for
construction, alteration, or repair of [any building, structure, or improvement upon land.] the
following if it is not residential construction:
(i) a building;
(ii) a structure; or
(iii) an improvement upon land.
(d) (i) "Residential construction" means the construction, alteration, or repair of:
(A) single family detached housing; or
(B) multifamily attached housing up to and including a fourplex.
(ii) "Residential construction" includes rental housing.
(2) [(a) Except as provided in Subsection (2)(b), before] Before any original commercial
contract exceeding [$2,000] $50,000 in amount for the construction, alteration, or repair of any
building, structure, or improvement upon land is awarded to any contractor, the owner shall
obtain from the contractor a payment bond:
(a) complying with Subsection (3)[. The bond shall become]; and
(b) that becomes binding upon the award of the original commercial contract to the

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contractor.
[(b) An owner is exempted from the requirements of this section if a person otherwise
eligible to file a lien under Title 38, Chapter 1, Mechanics' Liens, is barred from filing a mechanics'
lien under Section 38-11-107 .]
(3) The payment bond shall be:
(a) with a surety or sureties satisfactory to the owner for the protection of all persons
supplying labor, services, equipment, or material in the prosecution of the work provided for in
the commercial contract; and
(b) in a sum equal to the original commercial contract price.
(4) A person shall have a right of action on a payment bond under this chapter for any
unpaid amount due [him] that person if that person:
(a) [he] has furnished labor, services, equipment, or material in the prosecution of the
work provided for in the commercial contract for which the payment bond is furnished under this
chapter; and
(b) [he] has not been paid in full within 90 days after the last day on which [he] that
person:
(i) performed the labor or service for which a claim is made; or
(ii) supplied the equipment or material for which the claim is made.
(5) (a) An action under this section shall be brought in a court of competent jurisdiction in
the county where the commercial contract was to be performed and not elsewhere. [The]
(b) An action under this section is barred if not commenced within one year after the last
day on which the claimant:
(i) performed the labor or service on which the claim is based; or
(ii) supplied the equipment or material on which the claim is based.
(c) The obligee named in the payment bond need not be joined as a party to [the] an
action under this section.
(d) In any action upon a payment bond under this section, the court may award
reasonable attorneys' fees to the prevailing party, which attorneys' fees shall be taxed as costs in

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the action.
(6) The payment bond shall be exhibited to any interested person upon request.
(7) In any suit upon a payment bond under this chapter, the court shall award reasonable
attorneys' fees to the prevailing party.
Section 2. Section 14-2-2 is amended to read:
14-2-2. Failure of owner to obtain payment bond -- Liability.
(1) [Unless exempted under Section 14-2-1 , an] An owner who fails to obtain a payment
bond required under Section 14-2-1 is liable to each person who performed labor or service or
supplied equipment or materials under the commercial contract for the reasonable value of the
labor or service performed or the equipment or materials furnished up to but not exceeding the
commercial contract price.
(2) [No] An action to recover on [this] the liability described in Subsection (1) may not be
commenced after the expiration of one year after the day on which:
(a) the last of the labor or service was performed; or
(b) the equipment or material was supplied by the person.
(3) In an action for failure to obtain a bond, the court [may] shall award reasonable
attorneys' fees to the prevailing party. These attorneys' fees shall be taxed as costs in the action.

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