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H.B. 105 Enrolled

                 

CONSTRUCTION FILING AMENDMENTS

                 
2005 GENERAL SESSION

                 
STATE OF UTAH

                 
Chief Sponsor: Michael T. Morley

                 
Senate Sponsor: Thomas V. Hatch

                 
                  LONG TITLE
                  General Description:
                      This bill makes changes to mechanics' liens.
                  Highlighted Provisions:
                      This bill:
                      .    addresses exemptions from preliminary notice requirements;
                      .    addresses final completion of an original contract;
                      .    addresses certificates of compliance;
                      .    defines terms;
                      .    clarifies how the State Construction Registry is to be indexed;
                      .    requires the division to comply with Title 63, Chapter 38, Budgetary Procedures
                  Act, when setting fees for the database;
                      .    provides that actions in connection with a filing to the database are not
                  adjudications within the meaning of Title 63, Chapter 46b, Administrative
                  Procedures Act;
                      .    clarifies that the division is not responsible for monitoring the timeliness of filings;
                      .    establishes provisions for addressing delinquency of payment of a filing fee for a
                  filing to the database;
                      .    allows the division to make rules establishing the form of submission of an alternate
                  filing;
                      .    provides that the archiving of a notice filed with the database may occur no earlier
                  than the later of:
                          .    one year after the filing of a notice of completion;


                          .    two years after the last filing activity if no notice of completion is filed; or
                          .    one year after a filing is cancelled;
                      .    provides that data submitted to the database by a governmental entity is classified
                  under Title 63, Chapter 2, Government Records Access and Management Act, by the
                  division;
                      .    clarifies the required content of a notice of commencement filed for a project where
                  no building permit is required;
                      .    provides that a person requesting a notice of filings for a project is responsible for the
                  accuracy of an e-mail address, mailing address, or the telefax number to which notice
                  is requested to be sent;
                      .    provides that a designated agent need only send the notice to the provided e-mail
                  address, mailing address, or telefax number, whether or not the notice is actually
                  received;
                      .    modifies the time within which a subcontractor or supplier must file a preliminary
                  notice;
                      .    clarifies that a preliminary notice filed for one construction project applies to all labor,
                  service, equipment, and material for that construction project;
                      .    addresses requirements for a qualified beneficiary's recovery from the Residence Lien
                  Recovery Fund; and
                      .    makes technical changes.
                  Monies Appropriated in this Bill:
                      None
                  Other Special Clauses:
                      This bill provides retrospective operation.
                  Utah Code Sections Affected:
                  AMENDS:
                      14-1-20 (Superseded 05/01/05), as last amended by Chapter 30, Laws of Utah 2004
                      14-2-5 (Superseded 05/01/05), as last amended by Chapter 30, Laws of Utah 2004


                      38-1-7 (Effective 05/01/05), as last amended by Chapters 85 and 250, Laws of Utah 2004
                      38-1-11, as last amended by Chapters 42, 85 and 188, Laws of Utah 2004
                      38-1-27 (Effective 05/01/05), as repealed and reenacted by Chapter 250, Laws of Utah
                  2004
                      38-1-30, as enacted by Chapter 250, Laws of Utah 2004
                      38-1-31 (Effective 05/01/05), as enacted by Chapter 250, Laws of Utah 2004
                      38-1-32 (Effective 05/01/05), as enacted by Chapter 250, Laws of Utah 2004
                      38-1-33 (Effective 05/01/05), as enacted by Chapter 250, Laws of Utah 2004
                      38-1-37 (Effective 05/01/05), as enacted by Chapter 250, Laws of Utah 2004
                      38-11-204, as last amended by Chapter 42, Laws of Utah 2004
                      63-56-38.1 (Superseded 05/01/05), as last amended by Chapter 30, Laws of Utah 2004
                  REPEALS:
                      38-1-38, as enacted by Chapter 188, Laws of Utah 2004
                 
                  Be it enacted by the Legislature of the state of Utah:
                      Section 1. Section 14-1-20 (Superseded 05/01/05) is amended to read:
                       14-1-20 (Superseded 05/01/05). Preliminary notice requirement.
                      (1) Any person furnishing labor, service, equipment, or material for which a payment
                  bond claim may be made under this chapter shall provide preliminary notice to the payment bond
                  principal as prescribed by Section 38-1-27 , except that this section does not apply:
                      (a) to a person who is in privity of contract with the payment bond principal;
                      (b) to a person who contracts directly with the payment bond principal;
                      [(b)] (c) to a person performing labor for wages; or
                      [(c)] (d) if a notice of commencement is not filed as prescribed in Section 38-1-27 for the
                  project or improvement for which labor, service, equipment, or material is furnished.
                      (2) Any person who fails to provide the preliminary notice required by Subsection (1)
                  may not make a payment bond claim under this chapter.
                      (3) The preliminary notice required by Subsection (1) must be provided prior to


                  commencement of any action on the payment bond.
                      Section 2. Section 14-2-5 (Superseded 05/01/05) is amended to read:
                       14-2-5 (Superseded 05/01/05). Preliminary notice requirement.
                      (1) Any person furnishing labor, service, equipment, or material for which a payment
                  bond claim may be made under this chapter shall provide preliminary notice to the payment bond
                  principal as prescribed by Section 38-1-27 , except that this section does not apply:
                      (a) to a person who is in privity of contract with the payment bond principal;
                      (b) to a person who contracts directly with the payment bond principal;
                      [(b)] (c) to a person performing labor for wages; or
                      [(c)] (d) if a notice of commencement is not filed as prescribed in Section 38-1-27 for the
                  project or improvement for which labor, service, equipment, or material is furnished.
                      (2) Any person who fails to provide the preliminary notice required by Subsection (1)
                  may not make a payment bond claim under this chapter.
                      (3) The preliminary notice required by Subsection (1) must be provided prior to
                  commencement of any action on the payment bond.
                      Section 3. Section 38-1-7 (Effective 05/01/05) is amended to read:
                       38-1-7 (Effective 05/01/05). Notice of claim -- Contents -- Recording -- Service on
                  owner of property.
                      (1) (a) Except as modified in Section 38-1-27 , a person claiming benefits under this
                  chapter shall file for record with the county recorder of the county in which the property, or some
                  part of the property, is situated, a written notice to hold and claim a lien within 90 days from the
                  date of final completion of the original contract under which the claimant claims a lien under this
                  chapter. For purposes of this Subsection (1), final completion of the original contract means:
                      (i) if as a result of work performed under the original contract a permanent certificate of
                  occupancy is required for such work, the date of issuance of a permanent certificate of occupancy
                  by the local government entity having jurisdiction over the construction project;
                      (ii) if no certificate of occupancy is required by the local government entity having
                  jurisdiction over the construction project, but as a result of the work performed under the original


                  contract an inspection is required for such work, the date of the final inspection for such work by
                  the local government entity having jurisdiction over the construction project; or
                      (iii) if with regard to work performed under the original contract no certificate of
                  occupancy and no final inspection are required by the local government entity having jurisdiction
                  over the construction project, the date on which there remains no substantial work to be
                  completed to finish such work on the original contract.
                      (b) Notwithstanding Section 38-1-2 , where a subcontractor performs substantial work
                  after the applicable dates established by Subsections (1)(a)(i) and (ii), that subcontractor's
                  subcontract shall be considered an original contract for the sole purpose of determining:
                      (i) the subcontractor's time frame to file a notice of intent to hold and claim a lien under
                  Subsection (1); and
                      (ii) the original contractor's time frame to file a notice of intent to hold and claim a lien
                  under Subsection (1) for that subcontractor's work.
                      (c) For purposes of this section, the term "substantial work" does not include:
                      (i) repair work; or
                      (ii) warranty work[; or].
                      [(iii) work for which the project owner is not holding payment to ensure completion of
                  that work.]
                      (d) Notwithstanding Subsection (1)(a)(iii), final completion of the original contract does
                  not occur if work remains to be completed for which the owner is holding payment to ensure
                  completion of that work.
                      (2) (a) The notice required by Subsection (1) shall contain a statement setting forth:
                      (i) the name of the reputed owner if known or, if not known, the name of the record
                  owner;
                      (ii) the name of the person:
                      (A) by whom the lien claimant was employed; or
                      (B) to whom the lien claimant furnished the equipment or material;
                      (iii) the time when:


                      (A) the first and last labor or service was performed; or
                      (B) the first and last equipment or material was furnished;
                      (iv) a description of the property, sufficient for identification;
                      (v) the name, current address, and current phone number of the lien claimant;
                      (vi) the amount of the lien claim;
                      (vii) the signature of the lien claimant or the lien claimant's authorized agent;
                      (viii) an acknowledgment or certificate as required under Title 57, Chapter 3, Recording
                  of Documents; and
                      (ix) if the lien is on an owner-occupied residence, as defined in Section 38-11-102 , a
                  statement describing what steps an owner, as defined in Section 38-11-102 , may take to require a
                  lien claimant to remove the lien in accordance with Section 38-11-107 .
                      (b) Substantial compliance with the requirements of this Subsection (2) is sufficient to
                  hold and claim a lien.
                      (3) (a) Within 30 days after filing the notice of lien, the lien claimant shall deliver or mail
                  by certified mail a copy of the notice of lien to:
                      (i) the reputed owner of the real property; or
                      (ii) the record owner of the real property.
                      (b) If the record owner's current address is not readily available to the lien claimant, the
                  copy of the claim may be mailed to the last-known address of the record owner, using the names
                  and addresses appearing on the last completed real property assessment rolls of the county where
                  the affected property is located.
                      (c) Failure to deliver or mail the notice of lien to the reputed owner or record owner
                  precludes the lien claimant from an award of costs and attorneys' fees against the reputed owner
                  or record owner in an action to enforce the lien.
                      (4) The Division of Occupational and Professional Licensing shall make rules governing
                  the form of the statement required under Subsection (2)(a)(ix).
                      Section 4. Section 38-1-11 is amended to read:
                       38-1-11. Enforcement -- Time for -- Lis pendens -- Action for debt not affected --


                  Instructions and form affidavit and motion.
                      (1) A lien claimant shall file an action to enforce the lien filed under this chapter within
                  180 days from the day on which the lien claimant filed a notice of claim under Section 38-1-7 .
                      (2) (a) Within the time period provided for filing in Subsection (1) the lien claimant shall
                  file for record with the county recorder of each county in which the lien is recorded a notice of
                  the pendency of the action, in the manner provided in actions affecting the title or right to
                  possession of real property, or the lien shall be void, except as to persons who have been made
                  parties to the action and persons having actual knowledge of the commencement of the action.
                      (b) The burden of proof shall be upon the lien claimant and those claiming under the lien
                  claimant to show actual knowledge.
                      (3) This section may not be interpreted to impair or affect the right of any person to
                  whom a debt may be due for any work done or materials furnished to maintain a personal action
                  to recover the same.
                      (4) (a) If a lien claimant files an action to enforce a lien filed under this chapter involving
                  a residence, as defined in Section 38-11-102 , the lien claimant shall include with the service of
                  the complaint on the owner of the residence:
                      (i) instructions to the owner of the residence relating to the owner's rights under Title 38,
                  Chapter 11, Residence Lien Restriction and Lien Recovery Fund Act; and
                      (ii) a form affidavit to enable the owner of the residence to specify the grounds upon
                  which the owner may exercise available rights under Title 38, Chapter 11, Residence Lien
                  Restriction and Lien Recovery Fund Act.
                      (b) The instructions and form affidavit required by Subsection (4)(a) shall meet the
                  requirements established by rule by the Division of Occupational and Professional Licensing in
                  accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
                      (c) If a lien claimant fails to provide to the owner of the residence the instructions and
                  form affidavit required by Subsection (4)(a), the lien claimant shall be barred from maintaining
                  or enforcing the lien upon the residence.
                      (d) Judicial determination of the rights and liabilities of the owner of the residence under


                  Title 38, Chapters 1 and 11, and Title 14, Chapter 2, shall be stayed until after the owner has
                  been given a reasonable period of time to establish compliance with Subsections 38-11-204 (4)(a)
                  and (4)(b) through an informal proceeding, as set forth in Title 63, Chapter 46b, Administrative
                  Procedures Act, commenced within 30 days of the owner being served summons in the
                  foreclosure action, at the Division of Occupational and Professional Licensing and obtain a
                  certificate of compliance or denial of certificate of compliance, as defined in Section 38-11-102 .
                      (e) An owner applying for a certificate of compliance under Subsection (4)(d) shall send
                  by certified mail to all lien claimants:
                      (i) a copy of the application for a certificate of compliance; and
                      (ii) all materials filed in connection with the application.
                      (f) The Division of Occupational and Professional Licensing shall notify all lien
                  claimants listed in an owner's application for a certificate of compliance under Subsection (4)(d)
                  of the issuance or denial of a certificate of compliance.
                      (5) The written notice requirement applies to liens filed on or after July 1, 2004.
                      Section 5. Section 38-1-27 (Effective 05/01/05) is amended to read:
                       38-1-27 (Effective 05/01/05). State Construction Registry -- Form and contents of
                  notice of commencement, preliminary notice, and notice of completion.
                      (1) As used in this section and Sections 38-1-30 through 38-1-37 :
                      (a) "Alternate filing" means a filing made in a manner established by the division under
                  Subsection (2)(e) other than an electronic filing.
                      (b) "Cancel" means to indicate that a filing is no longer given effect.
                      (c) "Construction project," "project," or "improvement" means:
                      (i) a specific project or improvement for which one building permit is issued; or
                      (ii) if no building permit is required, the improvement or work required by a contract
                  between the owner and an original contractor under Section 38-1-2 .
                      [(a)] (d) "Database" means the State Construction [Notice] Registry [Database] created in
                  this section.
                      [(b)] (e) (i) "Designated agent" means the third party the Division of Occupational and


                  Professional Licensing contracts with to create and maintain the State Construction [Notice]
                  Registry [Database].
                      (ii) The designated agent is not an agency, instrumentality, or a political subdivision of
                  the state.
                      [(c)] (f) "Division" means the Division of Occupational and Professional Licensing.
                      (g) "Interested person" means a person who may be affected by a construction project.
                      [(d)] (h) "Program" means the State Construction [Notice] Registry [Database] Program
                  created in this section.
                      (2) Subject to receiving adequate funding through a legislative appropriation and
                  contracting with an approved third party vendor who meets the requirements of Sections 38-1-30
                  through 38-1-37 , there is created the State Construction [Notice] Registry [Database] Program
                  [which] that shall:
                      (a) (i) assist in protecting public health, safety, and welfare; and
                      (ii) promote a fair working environment;
                      (b) be overseen by the division with the assistance of the designated agent;
                      (c) provide a central repository for notices of commencement, preliminary notices, and
                  notices of completion filed in connection with all privately owned construction projects as well
                  as all state and local government owned construction projects throughout Utah;
                      (d) be accessible for filing and review [of] by way of the program Internet website of:
                      (i) notices of commencement[,];
                      (ii) preliminary notices[,]; and
                      (iii) notices of completion [via the program Internet website];
                      (e) accommodate:
                      (i) electronic filing of [such notices as well as provide for] the notices described in
                  Subsection (2)(d); and
                      (ii) alternate filing of the notices described in Subsection (2)(d) by U.S. mail, telefax,
                  [telephone,] or any other alternate method as provided by rule made by the division in
                  accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act;


                      (f) (i) provide electronic notification for up to three e-mail addresses for each interested
                  person or company who requests notice from the construction notice registry [as well as]; and
                      (ii) provide alternate means of notification for [those persons] a person who [make]
                  makes an alternate [filings] filing, including U.S. mail, telefax, or any other method as
                  prescribed by rule made by the division in accordance with Title 63, Chapter 46a, Utah
                  Administrative Rulemaking Act; and
                      (g) provide hard-copy printing of electronic receipts for an individual [filings] filing
                  evidencing the date and time of the individual [filings as well as] filing and the content of the
                  individual [filings] filing.
                      (3) (a) [Persons interested in a construction project] An interested person may request
                  notice of filings related to [the] a project.
                      (b) The database shall be indexed by:
                      (i) owner name[,];
                      (ii) original contractor name[,];
                      (iii) subdivision, development, or other project name, if any;
                      (iv) project address[,];
                      (v) lot or parcel number[,];
                      (vi) unique project number[,] assigned by the designated agent; and
                      (vii) any other identifier that the division considers reasonably appropriate [and
                  established by rule, made in accordance with Title 63, Chapter 46a, Utah Administrative
                  Rulemaking Act] in collaboration with the designated agent.
                      (4) (a) In accordance with [Title 63, Chapter 46a, Utah Administrative Rulemaking Act,]
                  the process required by Section 63-38-3.2 , the division shall establish [by rule] the [filing] fees
                  for [notices]:
                      (i) a notice of commencement[,];
                      (ii) a preliminary [notices, notices] notice;
                      (iii) a notice of completion[, and requests];
                      (iv) a request for notice[, which fees may not exceed the amount reasonably necessary to


                  create and maintain the database.];
                      (v) providing a required notice by an alternate method of delivery;
                      (vi) a duplicate receipt of a filing; and
                      (vii) account setup for a person who wishes to be billed periodically for filings with the
                  database.
                      (b) The fees allowed under Subsection (4)(a) may not exceed the amount reasonably
                  necessary to create and maintain the database.
                      [(b)] (c) The fees established by the division may vary by method of filing if one form of
                  filing is more costly than [other forms] another form of filing.
                      (d) Notwithstanding Subsection 63-38-3.2 (2)(c), the division need not submit the fee
                  schedule for fees allowed by this Subsection (4) to the Legislature until the 2006 General
                  Session.
                      (e) The division may provide by contract that the designated agent may retain all fees
                  collected by the designated agent except that the designated agent shall remit to the division the
                  cost of the division's oversight under Subsection (2)(b).
                      (5) (a) The database is classified as a public record under Title 63, Chapter 2,
                  Government Records Access and Management Act, unless otherwise classified by the division.
                      (b) A request for information submitted to the designated agent is not subject to Title 63,
                  Chapter 2, Government Records Access and Management Act.
                      (c) Information contained in a public record contained in the database shall be requested
                  from the designated agent.
                      (d) The designated agent may charge a commercially reasonable fee allowed by the
                  designated agent's contract with the division for providing information under Subsection (5)(c).
                      (e) Notwithstanding Title 63, Chapter 2, Government Records Access and Management
                  Act, if information is available in a public record contained in the database, a person may not
                  request the information from the division.
                      (f) (i) A person may request information that is not a public record contained in the
                  database from the division in accordance with Title 63, Chapter 2, Government Records Access


                  and Management Act.
                      (ii) The division shall inform the designated agent of how to direct inquiries made to the
                  designated agent for information that is not a public record contained in the database.
                      (6) The following are not an adjudicative proceeding under Title 63, Chapter 46b,
                  Administrative Procedures Act:
                      (a) the filing of a notice permitted by this chapter;
                      (b) the rejection of a filing permitted by this chapter; or
                      (c) other action by the designated agent in connection with a filing of any notice
                  permitted by this chapter.
                      (7) The division and the designated agent need not determine the timeliness of any notice
                  before filing the notice in the database.
                      (8) (a) A person who is delinquent on the payment of a fee established under Subsection
                  (4) may not file a notice with the database.
                      (b) A determination that a person is delinquent on the payment of a fee for filing
                  established under Subsection (4) shall be made in accordance with Title 63, Chapter 46b,
                  Administrative Procedures Act.
                      (c) Any order issued in a proceeding described in Subsection (8)(b) may prescribe the
                  method of that person's payment of fees for filing notices with the database after issuance of the
                  order.
                      Section 6. Section 38-1-30 is amended to read:
                       38-1-30. Third party contract -- Designated agent.
                      (1) The division shall contract in accordance with Title 63, Chapter 56, Utah
                  Procurement Code, with a third party to establish and maintain the database for the purposes
                  established under this section, Section 38-1-27 , and Sections 38-1-31 through 38-1-37 .
                      (2) (a) The third party under contract under this section is the division's designated agent,
                  and shall develop and maintain a database from the information provided by:
                      (i) local government entities issuing building permits;
                      (ii) original contractors;


                      (iii) subcontractors; and
                      (iv) other interested persons.
                      (b) The division and the designated agent shall design, develop, and test the database for
                  full implementation on May 1, 2005.
                      (3) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
                  division shall make rules and develop procedures for:
                      (a) the division to oversee and enforce this section, Section 38-1-27 , and Sections
                  38-1-31 through 38-1-37 ; [and]
                      (b) the designated agent to administer this section, Section 38-1-27 , and Sections 38-1-31
                  through 38-1-37 [.]; and
                      (c) the form of submission of an alternate filing.
                      (4) (a) The designated agent shall archive computer data files at least semiannually for
                  auditing purposes.
                      (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
                  division shall make rules to allow the designated agent[, unless requested otherwise by an
                  interested party for a particular project,] to periodically archive [and purge completed or inactive]
                  projects from the database[:].
                      (c) A project shall be archived no earlier than:
                      (i) [no earlier than] one year after the day on which a notice of [commencement]
                  completion is filed for a [particular] project; [or]
                      (ii) if no notice of [commencement] completion is filed, [no earlier than] two years after
                  the last filing activity for a [particular] project[.]; or
                      (iii) one year after the day on which a filing is cancelled under Subsection 38-1-32 (3)(c)
                  or 38-1-33 (2)(c).
                      [(c)] (d) The division may audit the designated agent's administration of the database as
                  often as the division considers necessary.
                      (5) The designated agent shall carry errors and omissions insurance in the amounts
                  established by rule made by the division in accordance with Title 63, Chapter 46a, Utah


                  Administrative Rulemaking Act.
                      Section 7. Section 38-1-31 (Effective 05/01/05) is amended to read:
                       38-1-31 (Effective 05/01/05). Building permit -- Construction -- Notice registry --
                  Notice of commencement of work.
                      (1) (a) (i) For a construction project where a building permit is issued, within 15 days
                  after the issuance of the building permit, the local government entity issuing that building permit
                  shall input the [data] building permit application and transmit the building permit information to
                  the database electronically [via] by way of the Internet or computer modem or by any other
                  means and such information shall form the basis of a notice of commencement.
                      (ii) For the purposes of classifying a record under Title 63, Chapter 2, Government
                  Records Access and Management Act, building permit information transmitted from a local
                  governmental entity to the database shall be classified in the database by the division
                  notwithstanding the local governmental entity's classification of the building permit information.
                      (b) For a construction project where a building permit is not issued, within 15 days after
                  commencement of physical construction work at the project site, the original contractor shall file
                  a notice of commencement with the database.
                      (c) An owner of construction, a lender, surety, or other interested [party] person may file
                  a notice of commencement with the designated agent within the [prescribed] time [set forth in
                  Subsection] prescribed by Subsections (1)(a) and (b).
                      (d) If duplicate notices of commencement are filed, they shall be combined into one
                  notice for each project. The designated agent shall assign each construction project a unique
                  project number [which] that:
                      (i) identifies each construction project; and
                      (ii) can be associated with all notices of commencement, preliminary notices, and notices
                  of completion.
                      (e) (i) A notice of commencement is effective as to all [work, materials, and equipment]
                  labor, service, equipment, and material furnished to the construction project after the filing of the
                  notice of commencement.


                      (ii) A notice of commencement is effective only as to the [work, materials, or equipment]
                  labor, service, equipment, and material furnished to the construction project that is provided
                  subsequent to the filing of the notice of commencement.
                      (2) (a) The content of a notice of commencement shall include the following [if available
                  on a building permit]:
                      [(a)] (i) the name and address of the owner of the project [or improvement];
                      [(b)] (ii) the name and address of the:
                      [(i)] (A) original contractor; and
                      [(ii)] (B) surety providing any payment bond for the project [or improvement], or if none
                  exists, a statement that a payment bond was not required for the work being performed;
                      [(c) (i)] (iii) (A) the project address if the project can be reasonably identified by an
                  address; or
                      [(ii)] (B) the name and general description of the location of the project if the project
                  cannot be reasonably identified by an address;
                      [(d)] (iv) a general description of the project; and
                      [(e)] (v) the lot or parcel number, and any subdivision, development, or other project
                  name, of the real property upon which the project is to be constructed if the project is subject to
                  mechanics' liens[; and].
                      [(f) a legal description of the property on which the project is located if the project is
                  subject to mechanics' liens.]
                      (b) The content of a notice of commencement need not include all of the items listed in
                  Subsection (2)(a) if:
                      (i) a building permit is issued for the project; and
                      (ii) all items listed in Subsection (2)(a) that are available on the building permit are
                  included in the notice of commencement.
                      (3) [Failure to file any] If a notice of commencement for a construction project [suspends
                  the operation of] is not filed within the time set forth in Subsections 38-1-31 (1)(a) and (b), the
                  following do not apply:


                      (a) [the preliminary notice provisions of] Section 38-1-32 ; and
                      (b) [the notice of completion provisions of] Section 38-1-33 .
                      (4) (a) [Electronic] Unless a person indicates to the division or designated agent that the
                  person does not wish to receive a notice under this section, electronic notice of the filing of a
                  notice of commencement or alternate notice as prescribed in Subsection (1), shall be provided to:
                      [(a)] (i) all persons who have filed notices of commencement for the project; and
                      [(b)] (ii) all interested [parties] persons who have requested such notice for the project.
                      (b) (i) A person to whom notice is required under Subsection (4)(a) is responsible for:
                      (A) providing an e-mail address, mailing address, or telefax number to which a notice
                  required by Subsection (4)(a) is to be sent; and
                      (B) the accuracy of any e-mail address, mailing address, or telefax number to which
                  notice is to be sent.
                      (ii) The designated agent fulfills the notice requirement of Subsection (4)(a) when it
                  sends the notice to the e-mail address, mailing address, or telefax number provided to the
                  designated agent whether or not the notice is actually received.
                      (5) The burden is upon any person seeking to enforce the notice of commencement to
                  prove that the notice of commencement is filed timely and meets all of the requirements in this
                  section.
                      (6) At the time a building permit is obtained, each original contractor shall conspicuously
                  post at the project site a copy of [each] the building permit obtained for the project
                  [improvement].
                      Section 8. Section 38-1-32 (Effective 05/01/05) is amended to read:
                       38-1-32 (Effective 05/01/05). Preliminary notice -- Subcontractor or supplier.
                      (1) (a) (i) A subcontractor or supplier shall file a preliminary notice with the database
                  within the later of:
                      (A) [Within] 20 days after commencement of its own work or the commencement of
                  furnishing [materials or equipment] labor, service, equipment, and material to a construction
                  project[, a subcontractor or supplier shall file a preliminary notice with the construction notice


                  registry.]; or
                      (B) 20 days after the filing of a notice of commencement.
                      (ii) A preliminary notice filed within the [20-day] period described in Subsection
                  (1)(a)(i) is effective as to all [work, materials, and equipment] labor, service, equipment, and
                  material furnished to the construction project, including labor, service, equipment, and material
                  provided to more than one contractor or subcontractor.
                      (b) If a subcontractor or supplier files a preliminary notice after the [20-day] period
                  prescribed by Subsection (1)(a), the preliminary notice becomes effective [as of] five days after
                  the [filing of the] day on which the preliminary notice is filed.
                      (c) Failure to file a preliminary notice within the [20-day] period required by Subsection
                  (1)(a) precludes a subcontractor or supplier from filing any claim for compensation earned for
                  performance of [work] labor or service or supply of materials or equipment furnished to the
                  construction project before the expiration of five days after the late filing of a preliminary notice,
                  except as against the person with whom the subcontractor or supplier contracted.
                      (d) (i) The preliminary notice must be filed before a notice of lien may be filed with the
                  county recorder pursuant to Section 38-1-7 .
                      (ii) The content of a preliminary notice shall include the following:
                      [(i)] (A) the name, address, and telephone number of the person furnishing the labor,
                  service, equipment, or material;
                      [(ii)] (B) the name and address of the person who contracted with the claimant for the
                  furnishing of the labor, service, equipment, or material;
                      [(iii)] (C) the name of the record or reputed owner of the project [or improvement];
                      [(iv)] (D) the name of the original contractor under which the claimant is performing or
                  will perform its work; and
                      [(v)] (E) the address of the project [or improvement] or a description of the location of
                  the project [or improvement].
                      (2) (a) (i) [Electronic] Unless a person indicates to the division or designated agent that
                  the person does not wish to receive a notice under this section, electronic notification of the filing


                  of a preliminary notice or alternate notice as prescribed in Subsection (1), shall be provided to:
                      [(i)] (A) the person filing the preliminary notice;
                      [(ii)] (B) each person that filed a notice of commencement for the project; and
                      [(iii)] (C) all interested [parties] persons who have requested such notice for the project.
                      (ii) A person to whom notice is required under Subsection (2)(a)(i) is responsible for:
                      (A) providing an e-mail address, mailing address, or telefax number to which a notice
                  required by Subsection (2)(a) is to be sent; and
                      (B) the accuracy of any e-mail address, mailing address, or telefax number to which
                  notice is to be sent.
                      (iii) The designated agent fulfills the notice requirement of Subsection (2)(a)(i) when it
                  sends the notice to the e-mail address, mailing address, or telefax number provided to the
                  designated agent whether or not the notice is actually received.
                      (b) The burden is upon the person filing the preliminary notice to prove that the
                  preliminary notice is filed timely and substantially meets all of the requirements of this section.
                      (c) Subject to Subsection (1)(d), a person required by this section to give preliminary
                  notice is only required to give one notice for each project [or improvement, which may include
                  an entire structure or a scheme of improvements].
                      (d) If the labor, service, equipment, or material is furnished pursuant to contracts under
                  more than one original contract, the notice requirements must be met with respect to the labor,
                  service, equipment, or [materials] material furnished under each original contract.
                      (3) (a) If a construction project owner, original contractor, subcontractor, or other
                  interested person believes that a preliminary notice has been filed erroneously, that owner,
                  original contractor, subcontractor, or other interested person can request from the person who
                  filed the preliminary notice evidence establishing the validity of the preliminary notice.
                      (b) Within ten days after the request described in Subsection (3)(a), the person or entity
                  that filed the preliminary notice shall provide the requesting person or entity proof that the
                  preliminary notice is valid.
                      (c) If the person or entity that filed the preliminary notice [cannot] does not provide proof


                  of the validity of the preliminary notice, that person or entity shall immediately [remove] cancel
                  the preliminary notice from the database in any manner prescribed by the division pursuant to
                  rule.
                      Section 9. Section 38-1-33 (Effective 05/01/05) is amended to read:
                       38-1-33 (Effective 05/01/05). Notice of completion.
                      (1) (a) (i) Upon final completion of a construction project, an owner of a construction
                  project, an original contractor, a lender that has provided financing for the construction project,
                  or surety that has provided bonding for the construction project, may file a notice of completion
                  with the database.
                      (ii) Final completion, for purposes of this Subsection (1), shall mean:
                      [(i)] (A) if as a result of work performed under the original contract a permanent
                  certificate of occupancy is required for such work, the date of issuance of a permanent certificate
                  of occupancy by the local government entity having jurisdiction over the construction project;
                      [(ii)] (B) if no certificate of occupancy is required by the local government entity having
                  jurisdiction over the construction project, but as a result of the work performed under the original
                  contract an inspection is required for such work, the date of the final inspection for such work by
                  the local government entity having jurisdiction over the construction project; or
                      [(iii)] (C) if with regard to the work performed under the original contract no certificate
                  of occupancy and no final inspection are required by the local government entity having
                  jurisdiction over the construction project, the date on which there remains no substantial work to
                  be completed to finish such work on the original contract.
                      (b) Notwithstanding Section 38-1-2 , where a subcontractor performs substantial work
                  after the applicable dates established by Subsections (1)(a)(i) and (ii), that subcontractor's
                  subcontract shall be considered an original contract for the sole purpose of determining:
                      (i) the subcontractor's time frame to file a notice to hold and claim a lien under
                  Subsection 38-1-7 (1); and
                      (ii) the original contractor's time frame to file a notice to hold and claim a lien under
                  Subsection 38-1-7 (1) for that subcontractor's work.


                      (c) For purposes of this section, the term "substantial work" does not include:
                      (i) repair work; or
                      (ii) warranty work[; or].
                      [(iii) work for which the project owner is not holding payment to ensure completion of
                  that work.]
                      (d) Notwithstanding Subsection (1)(a)(ii)(C), final completion of the original contract
                  does not occur if work remains to be completed for which the owner is holding payment to
                  ensure completion of the work.
                      [(d)] (e) (i) [Electronic] Unless a person indicates to the division or designated agent that
                  the person does not wish to receive a notice under this section, electronic notification of the filing
                  of a notice of completion or alternate notice as prescribed in Subsection (1)(a), shall be provided
                  to:
                      (A) each person that filed a notice of commencement for the project;
                      (B) each person that filed preliminary notice for the project; and
                      (C) all interested [parties] persons who have requested notice for the project.
                      (ii) A person to whom notice is required under Subsection (1)(e) is responsible for:
                      (A) providing an e-mail address, mailing address, or telefax number to which a notice
                  required by Subsection (1)(e) is to be sent; and
                      (B) the accuracy of any e-mail address, mailing address, or telefax number to which
                  notice is to be sent.
                      (iii) The designated agent fulfills the notice requirement of Subsection (1)(e)(i) when it
                  sends the notice to the e-mail address, mailing address, or telefax number provided to the
                  designated agent, whether or not the notice is actually received.
                      [(ii)] (iv) Upon the filing of a notice of completion, the time periods for filing
                  preliminary notices stated in Section 38-1-27 are modified such that all preliminary notices shall
                  be filed subsequent to the notice of completion and [shall be filed] within ten days from the day
                  on which the notice of completion is filed.
                      [(e)] (f) A subcontract that is considered an original contract for purposes of this section


                  shall not create a requirement for an additional preliminary notice if a preliminary notice has
                  already been given for [materials and] the labor, service, equipment, and material furnished to the
                  subcontractor who performs substantial work.
                      (2) (a) If a construction project owner, original contractor, subcontractor, or other
                  interested person believes that a notice of completion has been filed erroneously, that owner,
                  original contractor, subcontractor, or other interested person can request from the person who
                  filed the notice of completion evidence establishing the validity of the notice of completion.
                      (b) Within ten days after the request described in Subsection (2)(a), the person that filed
                  the notice of completion shall provide the requesting person proof that the notice of completion
                  is valid.
                      (c) If the person that filed the notice of completion [cannot] does not provide proof of the
                  validity of the notice of completion, that person shall immediately [remove] cancel the notice of
                  completion from the database in any manner prescribed by the division pursuant to rule.
                      Section 10. Section 38-1-37 (Effective 05/01/05) is amended to read:
                       38-1-37 (Effective 05/01/05). Application of Section 38-1-27 and Sections 38-1-30
                  through 38-1-36.
                      (1) Except as provided in Subsection (3), Section 38-1-27 and Sections 38-1-30 through
                  38-1-36 in effect as of May 1, 2005 shall apply to construction projects [commenced] for which a
                  notice of commencement is filed on or after May 1, 2005.
                      (2) A construction project [commenced] for which a notice of commencement is filed
                  before May 1, 2005 is subject to the provisions of this chapter in effect prior to May 1, 2005.
                      (3) (a) Section 38-1-27 and Sections 38-1-30 through 38-1-36 in effect as of May 1,
                  2005, shall apply to a construction project for which a notice of commencement is filed on or
                  after November 1, 2005 involving a residence, as defined in Subsection 38-11-102 (22).
                      (b) For a construction project for which a notice of commencement is filed before
                  November 1, 2005 involving a residence, as defined in Subsection 38-11-102 (22), the law in
                  effect on April 30, 2005 shall govern.
                      Section 11. Section 38-11-204 is amended to read:


                       38-11-204. Claims against the fund -- Requirement to make a claim --
                  Qualifications to receive compensation -- Qualifications to receive a certificate of
                  compliance.
                      (1) To claim recovery from the fund a person shall:
                      (a) meet the requirements of either Subsection (4) or (7);
                      (b) pay an application fee determined by the division under Section 63-38-3.2 ; and
                      (c) file with the division a completed application on a form provided by the division
                  accompanied by supporting documents establishing:
                      (i) that the person meets the requirements of either Subsection (4) or (7);
                      (ii) that the person was a qualified beneficiary or laborer during the construction on the
                  owner-occupied residence; and
                      (iii) the basis for the claim.
                      (2) To recover from the fund, the application required by Subsection (1) shall be filed no
                  later than one year:
                      (a) from the date the judgment required by Subsection (4)(d) is entered;
                      (b) from the date the nonpaying party filed bankruptcy, if the claimant is precluded from
                  obtaining a judgment or from satisfying the requirements of Subsection (4)(d) because the
                  nonpaying party filed bankruptcy within one year after the entry of judgment; or
                      (c) from the date the laborer, trying to recover from the fund, completed the laborer's
                  qualified services.
                      (3) To obtain a certificate of compliance an owner or agent of the owner shall establish
                  with the division that the owner meets the requirements of Subsections (4)(a) and (4)(b).
                      (4) To recover from the fund, regardless of whether the residence is occupied by the
                  owner, a subsequent owner, or the owner or subsequent owner's tenant or lessee, a qualified
                  beneficiary shall establish that:
                      (a) (i) the owner of the owner-occupied residence or the owner's agent entered into a
                  written contract with an original contractor licensed or exempt from licensure under Title 58,
                  Chapter 55, Utah Construction Trades Licensing Act:


                      (A) for the performance of qualified services;
                      (B) to obtain the performance of qualified services by others; or
                      (C) for the supervision of the performance by others of qualified services in construction
                  on that residence;
                      (ii) the owner of the owner-occupied residence or the owner's agent entered into a written
                  contract with a real estate developer for the purchase of an owner-occupied residence; or
                      (iii) the owner of the owner-occupied residence or the owner's agent entered into a
                  written contract with a factory built housing retailer for the purchase of an owner-occupied
                  residence;
                      (b) the owner has paid in full the original contractor, licensed or exempt from licensure
                  under Title 58, Chapter 55, Utah Construction Trades Licensing Act, real estate developer, or
                  factory built housing retailer under Subsection (4)(a) with whom the owner has a written contract
                  in accordance with the written contract and any amendments to the contract;
                      (c) (i) the original contractor, licensed or exempt from licensure under Title 58, Chapter
                  55, Utah Construction Trades Licensing Act, the real estate developer, or the factory built
                  housing retailer subsequently failed to pay a qualified beneficiary who is entitled to payment
                  under an agreement with that original contractor or real estate developer licensed or exempt from
                  licensure under Title 58, Chapter 55, Utah Construction Trades Licensing Act, for services
                  performed or materials supplied by the qualified beneficiary;
                      (ii) a subcontractor who contracts with the original contractor, licensed or exempt from
                  licensure under Title 58, Chapter 55, Utah Construction Trades Licensing Act, the real estate
                  developer, or the factory built housing retailer failed to pay a qualified beneficiary who is entitled
                  to payment under an agreement with that subcontractor or supplier; or
                      (iii) a subcontractor who contracts with a subcontractor or supplier failed to pay a
                  qualified beneficiary who is entitled to payment under an agreement with that subcontractor or
                  supplier;
                      (d) (i) unless precluded from doing so by the nonpaying party's bankruptcy filing within
                  the applicable time, the qualified beneficiary filed an action against the nonpaying party to


                  recover monies owed to the qualified beneficiary within the earlier of:
                      [(A) an action against the nonpaying party to recover monies owed to the qualified
                  beneficiary within 180 days from the date the qualified beneficiary last provided qualified
                  services, unless precluded from doing so by the nonpaying party's bankruptcy filing within the
                  180 days after completion of services; and]
                      [(B) a notice of commencement of action with the division within 30 days from the date
                  the qualified beneficiary filed the civil action if a civil action was filed as required by Subsection
                  (4)(d)(i)(A);]
                      (A) 180 days from the date the qualified beneficiary filed a notice of claim under Section
                  38-1-7 ; or
                      (B) 270 days from the completion of the original contract pursuant to Subsection
                  38-1-7 (1);
                      (ii) the qualified beneficiary has obtained a judgment against the nonpaying party who
                  failed to pay the qualified beneficiary under an agreement to provide qualified services for
                  construction of that owner-occupied residence;
                      (iii) (A) the qualified beneficiary has:
                      (I) obtained from a court of competent jurisdiction the issuance of an order requiring the
                  judgment debtor, or if a corporation any officer of the corporation, to appear before the court at a
                  specified time and place to answer concerning the debtor's or corporation's property;
                      (II) received return of service of the order from a person qualified to serve documents
                  under the Utah Rules of Civil Procedure, Rule 4(b); and
                      (III) made reasonable efforts to obtain asset information from the supplemental
                  proceedings; and
                      (B) if assets subject to execution are discovered as a result of the order required under
                  Subsection (4)(d)(iii)(A) or for any other reason, to obtain the issuance of a writ of execution
                  from a court of competent jurisdiction; or
                      (iv) the qualified beneficiary timely filed a proof of claim where permitted in the
                  bankruptcy action, if the nonpaying party has filed bankruptcy;


                      (e) the qualified beneficiary is not entitled to reimbursement from any other person; and
                      (f) the qualified beneficiary provided qualified services to a contractor, licensed or
                  exempt from licensure under Title 58, Chapter 55, Utah Construction Trades Licensing Act.
                      (5) The requirements of Subsections (4)(d)(i), (ii), and (iii) need not be met if the
                  qualified beneficiary has been precluded from obtaining a judgment against the nonpaying party
                  or from satisfying the requirements of Subsections (4)(d)(i), (ii), and (iii) because the nonpaying
                  party filed bankruptcy.
                      [(6) If a qualified beneficiary fails to file the notice with the division required under
                  Subsection (4)(d)(i)(B), the claim of the qualified beneficiary shall be paid:]
                      [(a) if otherwise qualified under this chapter;]
                      [(b) to the extent that the limit of Subsection 38-11-203 (4)(a) has not been reached by
                  payments from the fund to qualified beneficiaries who have complied with the notice
                  requirements of Subsection (4)(d)(i)(B); and]
                      [(c) in the order that the claims are filed by persons who fail to comply with Subsection
                  (4)(d)(i)(B), not to exceed the limit of Subsection 38-11-203 (4)(a).]
                      [(7)] (6) To recover from the fund a laborer shall:
                      (a) establish that the laborer has not been paid wages due for the work performed at the
                  site of a construction on an owner-occupied residence; and
                      (b) provide any supporting documents or information required by rule by the division.
                      [(8)] (7) A fee determined by the division under Section 63-38-3.2 shall be deducted
                  from any recovery from the fund received by a laborer.
                      [(9)] (8) The requirements of Subsections (4)(a) and (4)(b) may be satisfied if an owner
                  or agent of the owner establishes to the satisfaction of the director that the owner of the
                  owner-occupied residence or the owner's agent entered into a written contract with an original
                  contractor who:
                      (a) was a business entity that was not licensed under Title 58, Chapter 55, Utah
                  Construction Trades Licensing Act, but was solely or partly owned by an individual who was
                  licensed under Title 58, Chapter 55, Utah Construction Trades Licensing Act; or


                      (b) was a natural person who was not licensed under Title 58, Chapter 55, Utah
                  Construction Trades Licensing Act, but who was the sole or partial owner and qualifier of a
                  business entity that was licensed under Title 58, Chapter 55, Utah Construction Trades Licensing
                  Act.
                      [(10)] (9) The director shall have equitable power to determine if the requirements of
                  Subsections (4)(a) and (4)(b) have been met, but any decision by the director under [Title 38,
                  Chapter 11,] this chapter shall not alter or have any effect on any other decision by the division
                  under Title 58, Occupations and Professions.
                      Section 12. Section 63-56-38.1 (Superseded 05/01/05) is amended to read:
                       63-56-38.1 (Superseded 05/01/05). Preliminary notice requirement.
                      (1) Any person furnishing labor, service, equipment, or material for which a payment
                  bond claim may be made under this chapter shall provide preliminary notice to the payment bond
                  principal as prescribed by Section 38-1-27 , except that this section does not apply:
                      (a) to a person who is in privity of contract with the payment bond principal;
                      (b) to a person who contracts directly with the payment bond principal;
                      [(b)] (c) to a person performing labor for wages; or
                      [(c)] (d) if a notice of commencement is not filed as prescribed in Section 38-1-27 for the
                  project or improvement for which labor, service, equipment, or material is furnished.
                      (2) Any person who fails to provide the preliminary notice required by Subsection (1)
                  may not make a payment bond claim under this chapter.
                      (3) The preliminary notice required by Subsection (1) must be provided prior to
                  commencement of any action on the payment bond.
                      Section 13. Repealer.
                      This bill repeals:
                      Section 38-1-38, Lien notification.
                      Section 14. Retrospective operation.
                      (1) The amendments to Section 38-1-37 (Effective 05/01/05) have retrospective
                  operation to May 1, 2005.


                      (2) The amendments to Sections 14-1-20 (Superseded 05/01/05), 14-2-5 (Superseded
                  05/01/05), and 63-56-38.1 (Superseded 05/01/05) have retrospective operation to April 30, 2005.


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