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H.B. 219

             1     

CONSTRUCTION BOND 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 provisions related to private contractors bonds.
             9      Highlighted Provisions:
             10          This bill:
             11          .    provides definitions;
             12          .    makes the requirement that the owner obtain a bond from the contractor apply only
             13      to commercial contracts;
             14          .    increases the contract price amount to $50,000 for requiring the owner to obtain a
             15      bond from the contractor;
             16          .    deletes exemption related to the Residence Lien Restriction and Lien Recovery
             17      Fund Act; and
             18          .    makes technical changes.
             19      Monies Appropriated in this Bill:
             20          None
             21      Other Special Clauses:
             22          None
             23      Utah Code Sections Affected:
             24      AMENDS:
             25          14-2-1, as last amended by Chapter 308, Laws of Utah 1994
             26          14-2-2, as last amended by Chapter 308, Laws of Utah 1994
             27     


             28      Be it enacted by the Legislature of the state of Utah:
             29          Section 1. Section 14-2-1 is amended to read:
             30           14-2-1. Definitions -- Payment bond required -- Right of action -- Notice --
             31      Attorneys' fees.
             32          (1) For purposes of this chapter:
             33          (a) "Commercial contract" means a contract for the construction, alteration, or repair of
             34      the following if it is not residential construction:
             35          (i) a building;
             36          (ii) a structure; or
             37          (iii) an improvement upon land.
             38          [(a)] (b) "Contractor" means any person who is or may be awarded a commercial
             39      contract for the construction, alteration, or repair of any building, structure, or improvement
             40      upon land.
             41          [(b)] (c) "Owner" means any person contracting for construction, alteration, or repair of
             42      [any building, structure, or improvement upon land.] the following if it is not residential
             43      construction:
             44          (i) a building;
             45          (ii) a structure; or
             46          (iii) an improvement upon land.
             47          (d) (i) "Residential construction" means the construction, alteration, or repair of:
             48          (A) single family detached housing; or
             49          (B) multifamily attached housing up to and including a duplex.
             50          (ii) "Residential construction" includes rental housing.
             51          (2) [(a) Except as provided in Subsection (2)(b), before] Before any commercial
             52      contract exceeding [$2,000] $50,000 in amount for the construction, alteration, or repair of any
             53      building, structure, or improvement upon land is awarded to any contractor, the owner shall
             54      obtain from the contractor a payment bond:
             55          (a) complying with Subsection (3)[. The bond shall become]; and
             56          (b) that becomes binding upon the award of the commercial contract to the contractor.
             57          [(b) An owner is exempted from the requirements of this section if a person otherwise
             58      eligible to file a lien under Title 38, Chapter 1, Mechanics' Liens, is barred from filing a


             59      mechanics' lien under Section 38-11-107 .]
             60          (3) The payment bond shall be:
             61          (a) with a surety or sureties satisfactory to the owner for the protection of all persons
             62      supplying labor, services, equipment, or material in the prosecution of the work provided for in
             63      the commercial contract; and
             64          (b) in a sum equal to the commercial contract price.
             65          (4) A person shall have a right of action on a payment bond under this chapter for any
             66      unpaid amount due [him] that person if that person:
             67          (a) [he] has furnished labor, services, equipment, or material in the prosecution of the
             68      work provided for in the commercial contract for which the payment bond is furnished under
             69      this chapter; and
             70          (b) [he] has not been paid in full within 90 days after the last day on which [he] that
             71      person:
             72          (i) performed the labor or service for which a claim is made; or
             73          (ii) supplied the equipment or material for which the claim is made.
             74          (5) (a) An action under this section shall be brought in a court of competent jurisdiction
             75      in the county where the commercial contract was to be performed and not elsewhere. [The]
             76          (b) An action under this section is barred if not commenced within one year after the
             77      last day on which the claimant:
             78          (i) performed the labor or service on which the claim is based; or
             79          (ii) supplied the equipment or material on which the claim is based.
             80          (c) The obligee named in the payment bond need not be joined as a party to [the] an
             81      action under this section.
             82          (d) In any action upon a payment bond under this section, the court may award
             83      reasonable attorneys' fees to the prevailing party, which attorneys' fees shall be taxed as costs in
             84      the action.
             85          (6) The payment bond shall be exhibited to any interested person upon request.
             86          (7) In any suit upon a payment bond under this chapter, the court shall award
             87      reasonable attorneys' fees to the prevailing party.
             88          Section 2. Section 14-2-2 is amended to read:
             89           14-2-2. Failure of owner to obtain payment bond -- Liability.


             90          (1) [Unless exempted under Section 14-2-1 , an] An owner who fails to obtain a
             91      payment bond required under Section 14-2-1 is liable to each person who performed labor or
             92      service or supplied equipment or materials under the commercial contract for the reasonable
             93      value of the labor or service performed or the equipment or materials furnished up to but not
             94      exceeding the commercial contract price.
             95          (2) [No] An action to recover on [this] the liability described in Subsection (1) may not
             96      be commenced after the expiration of one year after the day on which:
             97          (a) the last of the labor or service was performed; or
             98          (b) the equipment or material was supplied by the person.
             99          (3) In an action for failure to obtain a bond, the court may award reasonable attorneys'
             100      fees to the prevailing party. These attorneys' fees shall be taxed as costs in the action.




Legislative Review Note
    as of 1-8-04 12:47 PM


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

Office of Legislative Research and General Counsel


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