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Sixth Substitute H.B. 136

Senator Thomas V. Hatch proposes the following substitute bill:


             1     
ELECTRONIC FILING OF PRELIMINARY

             2     
LIEN DOCUMENTS

             3     
2004 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Michael T. Morley

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Mechanics' Lien statute and enacts provisions for on-line filing of
             10      notices of commencement, preliminary notices, and notices of completion.
             11      Highlighted Provisions:
             12          This bill:
             13          .    addresses preliminary notice requirements;
             14          .    addresses notice of claim requirements;
             15          .    requires the Division of Occupational and Professional Licensing to contract for the
             16      creation and maintenance of a construction notice registry;
             17          .    requires the notice registry to be accessible for filing and reviewing notices of
             18      commencement, preliminary notices, and notices of completion;
             19          .    provides for alternative filing;
             20          .    requires that electronic notification and hard-copy printing of electronic receipts be
             21      provided;
             22          .    requires the division to establish by rule the fees for filing;
             23          .    creates requirements for filing notices;
             24          .    requires the assignment to each construction project a unique project number which
             25      identifies each construction project;



             26          .    provides requirements for the content of a notice of commencement;
             27          .    provides penalties for failure to file notices in a timely manner;
             28          .    provides penalties for abuse of the construction notice register;
             29          .    provides that the state is not liable;
             30          .    provides that construction notice does not impart notice for specified purposes;
             31          .    addresses applicability of sections on the basis of when a construction project is
             32      commenced;
             33          .    requires a sunset review by July 1, 2008; and
             34          .    makes technical changes.
             35      Monies Appropriated in this Bill:
             36          None
             37      Other Special Clauses:
             38          This bill provides a severability clause.
             39          This bill provides an effective date.
             40          This bill provides a coordination clause.
             41      Utah Code Sections Affected:
             42      AMENDS:
             43          14-1-20, as enacted by Chapter 271, Laws of Utah 1989
             44          14-2-5, as enacted by Chapter 271, Laws of Utah 1989
             45          38-1-7, as last amended by Chapter 223, Laws of Utah 1999
             46          63-56-38.1, as enacted by Chapter 271, Laws of Utah 1989
             47      ENACTS:
             48          38-1-30, Utah Code Annotated 1953
             49          38-1-31, Utah Code Annotated 1953
             50          38-1-32, Utah Code Annotated 1953
             51          38-1-33, Utah Code Annotated 1953
             52          38-1-34, Utah Code Annotated 1953
             53          38-1-35, Utah Code Annotated 1953
             54          38-1-36, Utah Code Annotated 1953
             55          38-1-37, Utah Code Annotated 1953
             56          63-55-238, Utah Code Annotated 1953



             57      REPEALS AND REENACTS:
             58          38-1-27, as last amended by Chapter 229, Laws of Utah 2001
             59     
             60      Be it enacted by the Legislature of the state of Utah:
             61          Section 1. Section 14-1-20 is amended to read:
             62           14-1-20. Preliminary notice requirement.
             63          Except [persons who are in privity of contract with a payment bond principal or except]
             64      for persons performing labor for wages, any person furnishing labor, service, equipment, or
             65      material for which a payment bond claim may be made under this chapter shall provide
             66      preliminary notice to the [payment bond principal] designated agent as prescribed by Section
             67      [ 38-1-27 ] 38-1-32 . Any person who fails to provide this preliminary notice may not make a
             68      payment bond claim under this chapter. The preliminary notice must be provided prior to
             69      commencement of any action on the payment bond.
             70          Section 2. Section 14-2-5 is amended to read:
             71           14-2-5. Preliminary notice requirement.
             72          Except [subcontractors who are in privity of contract with a payment bond principal or
             73      except] for persons performing labor for wages, any person furnishing labor, service,
             74      equipment, or material for which a payment bond claim may be made under this chapter shall
             75      provide preliminary notice to the [payment bond principal] designated agent as prescribed by
             76      Section [ 38-1-27 ] 38-1-32 . Any person who fails to provide this preliminary notice may not
             77      make a payment bond claim under this chapter. The preliminary notice must be provided prior
             78      to commencement of any action on the payment bond.
             79          Section 3. Section 38-1-7 is amended to read:
             80           38-1-7. Notice of claim -- Contents -- Recording -- Service on owner of property.
             81          (1) [A] Except as modified in Section 38-1-27 , a person claiming benefits under this
             82      chapter shall file for record with the county recorder of the county in which the property, or
             83      some part of the property, is situated, a written notice to hold and claim a lien within 90 days
             84      from the date:
             85          (a) the person last performed labor or service or last furnished equipment or material
             86      on a project or improvement for a residence as defined in Section 38-11-102 ; or
             87          (b) of final completion of an original contract not involving a residence as defined in


             88      Section 38-11-102 .
             89          (2) The notice required by Subsection (1) shall contain a statement setting forth:
             90          (a) the name of the reputed owner if known or, if not known, the name of the record
             91      owner;
             92          (b) the name of the person by whom the lien claimant was employed or to whom the
             93      lien claimant furnished the equipment or material;
             94          (c) the time when the first and last labor or service was performed or the first and last
             95      equipment or material was furnished;
             96          (d) a description of the property, sufficient for identification;
             97          (e) the name, current address, and current phone number of the lien claimant;
             98          (f) the signature of the lien claimant or the lien claimant's authorized agent;
             99          (g) an acknowledgment or certificate as required under Title 57, Chapter 3, Recording
             100      of Documents; and
             101          (h) if the lien is on an owner-occupied residence, as defined in Section 38-11-102 , a
             102      statement describing what steps an owner, as defined in Section 38-11-102 , may take to require
             103      a lien claimant to remove the lien in accordance with Section 38-11-107 .
             104          (3) Notwithstanding Subsection (2), an acknowledgment or certificate is not required
             105      for any notice filed after April 29, 1985, and before April 24, 1989.
             106          (4) (a) Within 30 days after filing the notice of lien, the lien claimant shall deliver or
             107      mail by certified mail a copy of the notice of lien to:
             108          (i) the reputed owner of the real property; or
             109          (ii) the record owner of the real property.
             110          (b) If the record owner's current address is not readily available to the lien claimant, the
             111      copy of the claim may be mailed to the last-known address of the record owner, using the
             112      names and addresses appearing on the last completed real property assessment rolls of the
             113      county where the affected property is located.
             114          (c) Failure to deliver or mail the notice of lien to the reputed owner or record owner
             115      precludes the lien claimant from an award of costs and attorneys' fees against the reputed
             116      owner or record owner in an action to enforce the lien.
             117          (5) The Division of Occupational and Professional Licensing shall make rules
             118      governing the form of the statement required under Subsection (2)(h).


             119          Section 4. Section 38-1-27 is repealed and reenacted to read:
             120          38-1-27. Construction notice registry -- Form and contents of notice of
             121      commencement, preliminary notice, and notice of completion.
             122          (1) As used in this section and Sections 38-1-30 through 38-1-37 :
             123          (a) "Database" means the Construction Notice Registry Database created in this
             124      section.
             125          (b) (i) "Designated agent" means the third party the Division of Occupational and
             126      Professional Licensing contracts with to create and maintain the Construction Notice Registry
             127      Database.
             128          (ii) The designated agent is not an agency, instrumentality, or a political subdivision of
             129      the state.
             130          (c) "Division" means the Division of Occupational and Professional Licensing.
             131          (d) "Program" means the Construction Notice Registry Database Program created in
             132      this section.
             133          (2) Subject to receiving adequate funding through a legislative appropriation and
             134      contracting with an approved third party vendor who meets the requirements of Sections
             135      38-1-30 through 38-1-37 , there is created the Construction Notice Registry Database Program
             136      which shall:
             137          (a) assist in protecting public health, safety, and welfare and promote a fair working
             138      environment;
             139          (b) be overseen by the division with the assistance of the designated agent;
             140          (c) provide a central repository for notices of commencement, preliminary notices, and
             141      notices of completion filed in connection with all privately owned construction projects as well
             142      as all state and local government owned construction projects throughout Utah;
             143          (d) be accessible for filing and review of notices of commencement, preliminary
             144      notices, and notices of completion via the program Internet website;
             145          (e) accommodate electronic filing of such notices as well as provide for alternate filing
             146      by U.S. mail, telefax, telephone, or any other alternate method as provided by rule made by the
             147      division in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act;
             148          (f) provide electronic notification for up to three e-mail addresses for each interested
             149      person or company who requests notice from the construction notice registry as well as provide


             150      alternate means of notification for those persons who make alternate filings, including U.S.
             151      mail, telefax, or any other method as prescribed by rule made by the division in accordance
             152      with Title 63, Chapter 46a, Utah Administrative Rulemaking Act; and
             153          (g) provide hard-copy printing of electronic receipts for individual filings evidencing
             154      the date and time of individual filings as well as the content of individual filings.
             155          (3) Persons interested in a construction project may request notice of filings related to
             156      the project. The database shall be indexed by owner name, original contractor name, project
             157      name, project address, parcel number, project number, and any other identifier that the division
             158      considers reasonably appropriate and established by rule, made in accordance with Title 63,
             159      Chapter 46a, Utah Administrative Rulemaking Act.
             160          (4) (a) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
             161      the division shall establish by rule the filing fees for notices of commencement, preliminary
             162      notices, notices of completion, and requests for notice, which fees may not exceed the amount
             163      reasonably necessary to create and maintain the database.
             164          (b) The fees established by the division may vary by method of filing if one form of
             165      filing is more costly than other forms of filing.
             166          Section 5. Section 38-1-30 is enacted to read:
             167          38-1-30. Third party contract -- Designated agent.
             168          (1) The division shall contract in accordance with Title 63, Chapter 56, Utah
             169      Procurement Code, with a third party to establish and maintain the database for the purposes
             170      established under this section, Section 38-1-27 , and Sections 38-1-31 through 38-1-37 .
             171          (2) (a) The third party under contract under this section is the division's designated
             172      agent, and shall develop and maintain a database from the information provided by:
             173          (i) local government entities issuing building permits;
             174          (ii) original contractors;
             175          (iii) subcontractors; and
             176          (iv) other interested persons.
             177          (b) The division and the designated agent shall design, develop, and test the database
             178      for full implementation on May 1, 2005.
             179          (3) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             180      division shall make rules and develop procedures for:


             181          (a) the division to oversee and enforce this section, Section 38-1-27 , and Sections
             182      38-1-31 through 38-1-37 ; and
             183          (b) the designated agent to administer this section, Section 38-1-27 , and Sections
             184      38-1-31 through 38-1-37 .
             185          (4) (a) The designated agent shall archive computer data files at least semiannually for
             186      auditing purposes.
             187          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             188      division shall make rules to allow the designated agent, unless requested otherwise by an
             189      interested party for a particular project, to periodically archive and purge completed or inactive
             190      projects from the database:
             191          (i) no earlier than one year after the day on which a notice of commencement is filed
             192      for a particular project; or
             193          (ii) if no notice of commencement is filed, no earlier than two years after the last filing
             194      activity for a particular project.
             195          (c) The division may audit the designated agent's administration of the database as
             196      often as the division considers necessary.
             197          (5) The designated agent shall carry errors and omissions insurance in the amounts
             198      established by rule made by the division in accordance with Title 63, Chapter 46a, Utah
             199      Administrative Rulemaking Act.
             200          Section 6. Section 38-1-31 is enacted to read:
             201          38-1-31. Building permit -- Construction -- Notice registry -- Notice of
             202      commencement of work.
             203          (1) (a) For a construction project where a building permit is issued, within 15 days after
             204      the issuance of the building permit, the local government entity issuing that building permit
             205      shall input the data and transmit the building permit information to the database electronically
             206      via the Internet or computer modem or by any other means and such information shall form the
             207      basis of a notice of commencement.
             208          (b) For a construction project where a building permit is not issued, within 15 days
             209      after commencement of physical construction work at the project site, the original contractor
             210      shall file a notice of commencement with the database.
             211          (c) An owner of construction, a lender, surety, or other interested party may file a


             212      notice of commencement with the designated agent within the prescribed time set forth in
             213      Subsection (1)(a).
             214          (d) If duplicate notices of commencement are filed, they shall be combined into one
             215      notice for each project. The designated agent shall assign each construction project a unique
             216      project number which identifies each construction project and can be associated with all
             217      notices of commencement, preliminary notices, and notices of completion.
             218          (e) A notice of commencement is effective as to all work, materials, and equipment
             219      furnished to the construction project after the filing of the notice of commencement. A notice
             220      of commencement is effective only as to the work, materials, or equipment furnished to the
             221      construction project that is provided subsequent to the filing of the notice of commencement.
             222          (2) The content of a notice of commencement shall include the following if available
             223      on a building permit:
             224          (a) the name and address of the owner of the project or improvement;
             225          (b) the name and address of the:
             226          (i) original contractor; and
             227          (ii) surety providing any payment bond for the project or improvement, or if none
             228      exists, a statement that a payment bond was not required for the work being performed;
             229          (c) (i) the project address if the project can be reasonably identified by an address; or
             230          (ii) the name and general description of the location of the project if the project cannot
             231      be reasonably identified by an address;
             232          (d) a general description of the project;
             233          (e) the parcel number of the real property upon which the project is to be constructed if
             234      the project is subject to mechanics' liens; and
             235          (f) a legal description of the property on which the project is located if the project is
             236      subject to mechanics' liens.
             237          (3) Failure to file any notice of commencement for a construction project suspends the
             238      operation of:
             239          (a) the preliminary notice provisions of Section 38-1-32 ; and
             240          (b) the notice of completion provisions of Section 38-1-33 .
             241          (4) Electronic notice of the filing of a notice of commencement or alternate notice as
             242      prescribed in Subsection (1), shall be provided to:


             243          (a) all persons who have filed notices of commencement for the project; and
             244          (b) all interested parties who have requested such notice for the project.
             245          (5) The burden is upon any person seeking to enforce the notice of commencement to
             246      prove that the notice of commencement is filed timely and meets all of the requirements in this
             247      section.
             248          (6) At the time a building permit is obtained, each original contractor shall
             249      conspicuously post at the project site a copy of each building permit obtained for the project
             250      improvement.
             251          Section 7. Section 38-1-32 is enacted to read:
             252          38-1-32. Preliminary notice -- Subcontractor or supplier.
             253          (1) (a) Within 20 days after commencement of its own work or the commencement of
             254      furnishing materials or equipment to a construction project, a subcontractor or supplier shall
             255      file a preliminary notice with the construction notice registry. A preliminary notice filed within
             256      the 20-day period is effective as to all work, materials, and equipment furnished to the
             257      construction project.
             258          (b) If a subcontractor or supplier files a preliminary notice after the 20-day period
             259      prescribed by Subsection (1)(a), the preliminary notice becomes effective as of five days after
             260      the filing of the preliminary notice.
             261          (c) Failure to file a preliminary notice within the 20-day period required by Subsection
             262      (1)(a) precludes a subcontractor or supplier from filing any claim for compensation earned for
             263      performance of work or supply of materials or equipment furnished to the construction project
             264      before the expiration of five days after the filing of a preliminary notice, except as against the
             265      person with whom the subcontractor or supplier contracted; provided, however, that nothing in
             266      this Subsection (1) shall prevent a subcontractor or supplier from seeking compensation under
             267      Section 38-11-101 .
             268          (d) The preliminary notice must be filed before a notice of lien may be filed with the
             269      county recorder pursuant to Section 38-1-7 . The content of a preliminary notice shall include
             270      the following:
             271          (i) the name, address, and telephone number of the person furnishing the labor, service,
             272      equipment, or material;
             273          (ii) the name and address of the person who contracted with the claimant for the


             274      furnishing of the labor, service, equipment, or material;
             275          (iii) the name of the record or reputed owner of the project or improvement;
             276          (iv) the name of the original contractor under which the claimant is performing or will
             277      perform its work; and
             278          (v) the address of the project or improvement or a description of the location of the
             279      project or improvement.
             280          (2) (a) Electronic notification of the filing of a preliminary notice or alternate notice as
             281      prescribed in Subsection (1), shall be provided to:
             282          (i) the person filing the preliminary notice;
             283          (ii) each person that filed a notice of commencement for the project; and
             284          (iii) all interested parties who have requested such notice for the project.
             285          (b) The burden is upon the person filing the preliminary notice to prove that the
             286      preliminary notice is filed timely and substantially meets all of the requirements of this section.
             287          (c) Subject to Subsection (1)(d), a person required by this section to give preliminary
             288      notice is only required to give one notice for each project or improvement, which may include
             289      an entire structure or a scheme of improvements.
             290          (d) If the labor, service, equipment, or material is furnished pursuant to contracts under
             291      more than one original contract, the notice requirements must be met with respect to the labor,
             292      service, equipment, or materials furnished under each original contract.
             293          (3) (a) If a construction project owner, original contractor, subcontractor, or other
             294      interested person believes that a preliminary notice has been filed erroneously, that owner,
             295      original contractor, subcontractor, or other interested person can request evidence establishing
             296      the validity of the preliminary notice.
             297          (b) Within ten days after the request described in Subsection (3)(a), the person or entity
             298      that filed the preliminary notice shall provide the requesting person or entity proof that the
             299      preliminary notice is valid.
             300          (c) If the person or entity that filed the preliminary notice cannot provide proof of the
             301      validity of the preliminary notice, that person or entity shall immediately remove the
             302      preliminary notice from the database.
             303          Section 8. Section 38-1-33 is enacted to read:
             304          38-1-33. Notice of completion.


             305          (1) (a) Upon final completion of a construction project, an owner of a construction
             306      project, an original contractor, a lender that has provided financing for the construction project,
             307      or surety that has provided bonding for the construction project, may file a notice of completion
             308      with the database. Final completion, for purposes of this Subsection (1), shall mean:
             309          (i) if as a result of work performed under the original contract a permanent certificate
             310      of occupancy is required for such work, the date of issuance of a permanent certificate of
             311      occupancy by the local government entity having jurisdiction over the construction project;
             312          (ii) if no certificate of occupancy is required by the local government entity having
             313      jurisdiction over the construction project, but as a result of the work performed under the
             314      original contract an inspection is required for such work, the date of the final inspection for
             315      such work by the local government entity having jurisdiction over the construction project; or
             316          (iii) if with regard to the work performed under the original contract no certificate of
             317      occupancy and no final inspection are required by the local government entity having
             318      jurisdiction over the construction project, the date on which there remains no substantial work
             319      to be completed to finish such work on the original contract.
             320          (b) Notwithstanding Section 38-1-2 , where a subcontractor performs substantial work
             321      after the applicable dates established by Subsections (1)(a)(i) and (ii), that subcontractor's
             322      subcontract shall be considered an original contract for the sole purpose of determining:
             323          (i) the subcontractor's time frame to file a notice to hold and claim a lien under
             324      Subsection 38-1-7 (1); and
             325          (ii) the original contractor's time frame to file a notice to hold and claim a lien under
             326      Subsection 38-1-7 (1) for that subcontractor's work.
             327          (c) For purposes of this section, the term "substantial work" does not include:
             328          (i) repair work;
             329          (ii) warranty work; or
             330          (iii) work for which the project owner is not holding payment to ensure completion of
             331      that work.
             332          (d) (i) Electronic notification of the filing of a notice of completion or alternate notice
             333      as prescribed in Subsection (1)(a), shall be provided to:
             334          (A) each person that filed a notice of commencement for the project;
             335          (B) each person that filed preliminary notice for the project; and


             336          (C) all interested parties who have requested notice for the project.
             337          (ii) Upon the filing of a notice of completion, the time periods for filing preliminary
             338      notices stated in Section 38-1-27 are modified such that all preliminary notices shall be filed
             339      subsequent to the notice of completion and shall be filed within ten days from the day on which
             340      the notice of completion is filed.
             341          (e) A subcontract that is considered an original contract for purposes of this section
             342      shall not create a requirement for an additional preliminary notice if a preliminary notice has
             343      already been given for materials and labor furnished to the subcontractor who performs
             344      substantial work.
             345          (2) (a) If a construction project owner, original contractor, subcontractor, or other
             346      interested person believes that a notice of completion has been filed erroneously, that owner,
             347      original contractor, subcontractor, or other interested person can request evidence establishing
             348      the validity of the notice of completion.
             349          (b) Within ten days after the request described in Subsection (2)(a), the person that
             350      filed the notice of completion shall provide the requesting person proof that the notice of
             351      completion is valid.
             352          (c) If the person that filed the notice of completion cannot provide proof of the validity
             353      of the notice of completion, that person shall immediately remove the notice of completion
             354      from the database.
             355          Section 9. Section 38-1-34 is enacted to read:
             356          38-1-34. Abuse of database -- Penalty.
             357          (1) A person abuses the database if that person records a notice in the database:
             358          (a) without a good faith basis for doing so;
             359          (b) with the intent to exact more than is due from the project owner or any other
             360      interested party; or
             361          (c) to procure an unjustified advantage or benefit.
             362          (2) A person who violates Subsection (1) is liable to the owner of the construction
             363      project, an original contractor, a subcontractor, or any interested party who is affected by the
             364      notice for twice the amount of the actual damages incurred by such party or $2,000, whichever
             365      is greater.
             366          Section 10. Section 38-1-35 is enacted to read:


             367          38-1-35. State not liable.
             368          (1) The state and the state's agencies, instrumentalities, and political subdivisions are
             369      not liable for any errors in receiving, recording, maintaining, and reporting any notices or
             370      information in the database.
             371          (2) The designated agent shall:
             372          (a) not be entitled to the liability limitations provided by this section; and
             373          (b) maintain a liability insurance policy in an amount set by rule.
             374          Section 11. Section 38-1-36 is enacted to read:
             375          38-1-36. Construction notice does not impart notice.
             376          The filing of a document in the database is not intended to give notice to all persons of
             377      the content of the document within the meaning of Section 57-3-102 and does not constitute
             378      constructive notice of matters relating to real property to purchasers for value and without
             379      knowledge.
             380          Section 12. Section 38-1-37 is enacted to read:
             381          38-1-37. Application of Section 38-1-27 and Sections 38-1-30 through 38-1-36.
             382          (1) Section 38-1-27 and Sections 38-1-30 through 38-1-36 in effect as of May 1, 2005
             383      shall apply to construction projects commenced on or after May 1, 2005.
             384          (2) A construction project commenced before May 1, 2005 is subject to the provisions
             385      of this chapter in effect prior to May 1, 2005.
             386          Section 13. Section 63-55-238 is enacted to read:
             387          63-55-238. Repeal dates, Title 38.
             388          Section 38-1-27 and Sections 38-1-30 through 38-1-37 are repealed July 1, 2008.
             389          Section 14. Section 63-56-38.1 is amended to read:
             390           63-56-38.1. Preliminary notice requirement.
             391          Except [subcontractors who are in privity of contract with a payment bond principal or
             392      except] for persons performing labor for wages, any person furnishing labor, service,
             393      equipment, or material for which a payment bond claim may be made under this chapter shall
             394      provide preliminary notice to the [payment bond principal] designated agent as prescribed by
             395      Section [ 38-1-27 ] 38-1-32 . Any person who fails to provide this preliminary notice may not
             396      make a payment bond claim under this chapter. The preliminary notice must be provided prior
             397      to commencement of any action on the payment bond.


             398          Section 15. Severability clause.
             399          If any provision of this chapter is held invalid or unconstitutional by a court of
             400      competent jurisdiction, the invalidity shall not affect the other provisions of this chapter which
             401      can be given effect without the invalid or unconstitutional provision.
             402          Section 16. Effective date.
             403          (1) Except for Section 38-1-30 , this bill takes effect on May 1, 2005.
             404          (2) If approved by two-thirds of all the members elected to each house, Section 38-1-30
             405      takes effect upon approval by the governor, or the day following the constitutional time limit of
             406      Utah Constitution Article VII, Section 8, without the governor's signature, or in the case of a
             407      veto, the date of veto override.
             408          Section 17. Coordinating H.B. 136 with H.B. 20.
             409          It is the intent of the Legislature that if this H.B. 136 and H.B. 20, Construction
             410      Bonding Statutes, both pass that the Office of Legislative Research and General Counsel in
             411      preparing the Utah Code database for publication merge the amendments of these bills as
             412      follows:
             413          (1) Section 14-1-20 , effective May 1, 2005, shall read:
             414          " 14-1-20. Preliminary notice requirement.
             415          [Except persons who are in privity of contract with a payment bond principal or except
             416      for persons performing labor for wages, any]
             417          (1) Any person furnishing labor, service, equipment, or material for which a payment
             418      bond claim may be made under this chapter shall provide preliminary notice to the [payment
             419      bond principal] designated agent as prescribed by Section [ 38-1-27 .] 38-1-32 , except that this
             420      section does not apply:
             421          (a) to a person performing labor for wages; or
             422          (b) if a notice of commencement is not filed as prescribed in Section 38-1-31 for the
             423      project or improvement for which labor, service, equipment, or material is furnished.
             424          (2) Any person who fails to provide [this] the preliminary notice required by
             425      Subsection (1) may not make a payment bond claim under this chapter.
             426          (3) The preliminary notice required by Subsection (1) must be provided prior to
             427      commencement of any action on the payment bond."
             428          (2) Section 14-2-5 , effective May 1, 2005, shall read:


             429          " 14-2-5. Preliminary notice requirement.
             430          [Except subcontractors who are in privity of contract with a payment bond principal or
             431      except for persons performing labor for wages, any]
             432          (1) Any person furnishing labor, service, equipment, or material for which a payment
             433      bond claim may be made under this chapter shall provide preliminary notice to the [payment
             434      bond principal] designated agent as prescribed by Section [ 38-1-27 .] 38-1-32 , except that this
             435      section does not apply:
             436          (a) to a person performing labor for wages; or
             437          (b) if a notice of commencement is not filed as prescribed in Section 38-1-31 for the
             438      project or improvement for which labor, service, equipment, or material is furnished.
             439          (2) Any person who fails to provide [this] the preliminary notice required by
             440      Subsection (1) may not make a payment bond claim under this chapter.
             441          (3) The preliminary notice required by Subsection (1) must be provided prior to
             442      commencement of any action on the payment bond."
             443          (3) Section 63-56-38.1 , effective May 1, 2005, shall read:
             444          " 63-56-38.1. Preliminary notice requirement.
             445          [Except subcontractors who are in privity of contract with a payment bond principal or
             446      except for persons performing labor for wages, any]
             447          (1) Any person furnishing labor, service, equipment, or material for which a payment
             448      bond claim may be made under this chapter shall provide preliminary notice to the [payment
             449      bond principal] designated agent as prescribed by Section [ 38-1-27 .] 38-1-32 , except that this
             450      section does not apply:
             451          (a) to a person performing labor for wages; or
             452          (b) if a notice of commencement is not filed as prescribed in Section 38-1-31 for the
             453      project or improvement for which labor, service, equipment, or material is furnished.
             454          (2) Any person who fails to provide [this] the preliminary notice required by
             455      Subsection (1) may not make a payment bond claim under this chapter.
             456          (3) The preliminary notice required by Subsection (1) must be provided prior to
             457      commencement of any action on the payment bond."


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