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First Substitute H.B. 105

Representative Michael T. Morley proposes the following substitute bill:


             1     
CONSTRUCTION FILING AMENDMENTS

             2     
2005 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: Michael T. Morley

             5     
             6      LONG TITLE
             7      General Description:
             8          This bill makes changes to mechanics' liens.
             9      Highlighted Provisions:
             10          This bill:
             11          .    addresses exemptions from preliminary notice requirements;
             12          .    addresses final completion of an original contract;
             13          .    addresses certificates of compliance;
             14          .    defines terms;
             15          .    clarifies how the State Construction Registry is to be indexed;
             16          .    requires the division to comply with Title 63, Chapter 38, Budgetary Procedures
             17      Act, when setting fees for the database;
             18          .    provides that actions in connection with a filing to the database are not
             19      adjudications within the meaning of Title 63, Chapter 46b, Administrative
             20      Procedures Act;
             21          .    clarifies that the division is not responsible for monitoring the timeliness of filings;
             22          .    establishes provisions for addressing delinquency of payment of a filing fee for a
             23      filing to the database;
             24          .    allows the division to make rules establishing the form of submission of an alternate
             25      filing;


             26          .    provides that the archiving of a notice filed with the database may occur no earlier
             27      than the later of:
             28              .    one year after the filing of a notice of completion;
             29              .    two years after the last filing activity if no notice of completion is filed; or
             30              .    one year after a filing is cancelled;
             31          .    provides that data submitted to the database by a governmental entity is classified
             32      under Title 63, Chapter 2, Government Records Access and Management Act, by
             33      the division;
             34          .    clarifies the required content of a notice of commencement filed for a project where
             35      no building permit is required;
             36          .    provides that a person requesting a notice of filings for a project is responsible for
             37      the accuracy of an e-mail address, mailing address, or the telefax number to which
             38      notice is requested to be sent;
             39          .    provides that a designated agent need only send the notice to the provided e-mail
             40      address, mailing address, or telefax number, whether or not the notice is actually
             41      received;
             42          .    modifies the time within which a subcontractor or supplier must file a preliminary
             43      notice;
             44          .    clarifies that a preliminary notice filed for one construction project applies to all
             45      labor, service, equipment, and material for that construction project;
             46          .    provides that a qualified beneficiary may recover from the Residence Lien Recovery
             47      Fund only if the qualified beneficiary files an action within 180 days after a notice
             48      of claim is filed under Section 38-1-7; and
             49          .    makes technical changes.
             50      Monies Appropriated in this Bill:
             51          None
             52      Other Special Clauses:
             53          This bill provides retrospective operation.
             54      Utah Code Sections Affected:
             55      AMENDS:
             56          14-1-20 (Superseded 05/01/05), as last amended by Chapter 30, Laws of Utah 2004


             57          14-2-5 (Superseded 05/01/05), as last amended by Chapter 30, Laws of Utah 2004
             58          38-1-7 (Effective 05/01/05), as last amended by Chapters 85 and 250, Laws of Utah
             59      2004
             60          38-1-11, as last amended by Chapters 42, 85 and 188, Laws of Utah 2004
             61          38-1-27 (Effective 05/01/05), as repealed and reenacted by Chapter 250, Laws of Utah
             62      2004
             63          38-1-30, as enacted by Chapter 250, Laws of Utah 2004
             64          38-1-31 (Effective 05/01/05), as enacted by Chapter 250, Laws of Utah 2004
             65          38-1-32 (Effective 05/01/05), as enacted by Chapter 250, Laws of Utah 2004
             66          38-1-33 (Effective 05/01/05), as enacted by Chapter 250, Laws of Utah 2004
             67          38-1-37 (Effective 05/01/05), as enacted by Chapter 250, Laws of Utah 2004
             68          38-11-204, as last amended by Chapter 42, Laws of Utah 2004
             69          63-56-38.1 (Superseded 05/01/05), as last amended by Chapter 30, Laws of Utah 2004
             70     
             71      Be it enacted by the Legislature of the state of Utah:
             72          Section 1. Section 14-1-20 (Superseded 05/01/05) is amended to read:
             73           14-1-20 (Superseded 05/01/05). Preliminary notice requirement.
             74          (1) Any person furnishing labor, service, equipment, or material for which a payment
             75      bond claim may be made under this chapter shall provide preliminary notice to the payment
             76      bond principal as prescribed by Section 38-1-27 , except that this section does not apply:
             77          (a) to a person who is in privity of contract with the payment bond principal;
             78          (b) to a person who contracts directly with the payment bond principal;
             79          [(b)] (c) to a person performing labor for wages; or
             80          [(c)] (d) if a notice of commencement is not filed as prescribed in Section 38-1-27 for
             81      the project or improvement for which labor, service, equipment, or material is furnished.
             82          (2) Any person who fails to provide the preliminary notice required by Subsection (1)
             83      may not make a payment bond claim under this chapter.
             84          (3) The preliminary notice required by Subsection (1) must be provided prior to
             85      commencement of any action on the payment bond.
             86          Section 2. Section 14-2-5 (Superseded 05/01/05) is amended to read:
             87           14-2-5 (Superseded 05/01/05). Preliminary notice requirement.


             88          (1) Any person furnishing labor, service, equipment, or material for which a payment
             89      bond claim may be made under this chapter shall provide preliminary notice to the payment
             90      bond principal as prescribed by Section 38-1-27 , except that this section does not apply:
             91          (a) to a person who is in privity of contract with the payment bond principal;
             92          (b) to a person who contracts directly with the payment bond principal;
             93          [(b)] (c) to a person performing labor for wages; or
             94          [(c)] (d) if a notice of commencement is not filed as prescribed in Section 38-1-27 for
             95      the project or improvement for which labor, service, equipment, or material is furnished.
             96          (2) Any person who fails to provide the preliminary notice required by Subsection (1)
             97      may not make a payment bond claim under this chapter.
             98          (3) The preliminary notice required by Subsection (1) must be provided prior to
             99      commencement of any action on the payment bond.
             100          Section 3. Section 38-1-7 (Effective 05/01/05) is amended to read:
             101           38-1-7 (Effective 05/01/05). Notice of claim -- Contents -- Recording -- Service on
             102      owner of property.
             103          (1) (a) Except as modified in Section 38-1-27 , a person claiming benefits under this
             104      chapter shall file for record with the county recorder of the county in which the property, or
             105      some part of the property, is situated, a written notice to hold and claim a lien within 90 days
             106      from the date of final completion of the original contract under which the claimant claims a
             107      lien under this chapter. For purposes of this Subsection (1), final completion of the original
             108      contract means:
             109          (i) if as a result of work performed under the original contract a permanent certificate
             110      of occupancy is required for such work, the date of issuance of a permanent certificate of
             111      occupancy by the local government entity having jurisdiction over the construction project;
             112          (ii) if no certificate of occupancy is required by the local government entity having
             113      jurisdiction over the construction project, but as a result of the work performed under the
             114      original contract an inspection is required for such work, the date of the final inspection for
             115      such work by the local government entity having jurisdiction over the construction project; or
             116          (iii) if with regard to work performed under the original contract no certificate of
             117      occupancy and no final inspection are required by the local government entity having
             118      jurisdiction over the construction project, the date on which there remains no substantial work


             119      to be completed to finish such work on the original contract.
             120          (b) Notwithstanding Section 38-1-2 , where a subcontractor performs substantial work
             121      after the applicable dates established by Subsections (1)(a)(i) and (ii), that subcontractor's
             122      subcontract shall be considered an original contract for the sole purpose of determining:
             123          (i) the subcontractor's time frame to file a notice of intent to hold and claim a lien
             124      under Subsection (1); and
             125          (ii) the original contractor's time frame to file a notice of intent to hold and claim a lien
             126      under Subsection (1) for that subcontractor's work.
             127          (c) For purposes of this section, the term "substantial work" does not include:
             128          (i) repair work; or
             129          (ii) warranty work[; or].
             130          [(iii) work for which the project owner is not holding payment to ensure completion of
             131      that work.]
             132          (d) Notwithstanding Subsection (1)(a)(iii), final completion of the original contract
             133      does not occur if work remains to be completed for which the owner is holding payment to
             134      ensure completion of that work.
             135          (2) (a) The notice required by Subsection (1) shall contain a statement setting forth:
             136          (i) the name of the reputed owner if known or, if not known, the name of the record
             137      owner;
             138          (ii) the name of the person:
             139          (A) by whom the lien claimant was employed; or
             140          (B) to whom the lien claimant furnished the equipment or material;
             141          (iii) the time when:
             142          (A) the first and last labor or service was performed; or
             143          (B) the first and last equipment or material was furnished;
             144          (iv) a description of the property, sufficient for identification;
             145          (v) the name, current address, and current phone number of the lien claimant;
             146          (vi) the amount of the lien claim;
             147          (vii) the signature of the lien claimant or the lien claimant's authorized agent;
             148          (viii) an acknowledgment or certificate as required under Title 57, Chapter 3,
             149      Recording of Documents; and


             150          (ix) if the lien is on an owner-occupied residence, as defined in Section 38-11-102 , a
             151      statement describing what steps an owner, as defined in Section 38-11-102 , may take to require
             152      a lien claimant to remove the lien in accordance with Section 38-11-107 .
             153          (b) Substantial compliance with the requirements of this Subsection (2) is sufficient to
             154      hold and claim a lien.
             155          (3) (a) Within 30 days after filing the notice of lien, the lien claimant shall deliver or
             156      mail by certified mail a copy of the notice of lien to:
             157          (i) the reputed owner of the real property; or
             158          (ii) the record owner of the real property.
             159          (b) If the record owner's current address is not readily available to the lien claimant, the
             160      copy of the claim may be mailed to the last-known address of the record owner, using the
             161      names and addresses appearing on the last completed real property assessment rolls of the
             162      county where the affected property is located.
             163          (c) Failure to deliver or mail the notice of lien to the reputed owner or record owner
             164      precludes the lien claimant from an award of costs and attorneys' fees against the reputed
             165      owner or record owner in an action to enforce the lien.
             166          (4) The Division of Occupational and Professional Licensing shall make rules
             167      governing the form of the statement required under Subsection (2)(a)(ix).
             168          Section 4. Section 38-1-11 is amended to read:
             169           38-1-11. Enforcement -- Time for -- Lis pendens -- Action for debt not affected --
             170      Instructions and form affidavit and motion.
             171          (1) A lien claimant shall file an action to enforce the lien filed under this chapter within
             172      180 days from the day on which the lien claimant filed a notice of claim under Section 38-1-7 .
             173          (2) (a) Within the time period provided for filing in Subsection (1) the lien claimant
             174      shall file for record with the county recorder of each county in which the lien is recorded a
             175      notice of the pendency of the action, in the manner provided in actions affecting the title or
             176      right to possession of real property, or the lien shall be void, except as to persons who have
             177      been made parties to the action and persons having actual knowledge of the commencement of
             178      the action.
             179          (b) The burden of proof shall be upon the lien claimant and those claiming under the
             180      lien claimant to show actual knowledge.


             181          (3) This section may not be interpreted to impair or affect the right of any person to
             182      whom a debt may be due for any work done or materials furnished to maintain a personal
             183      action to recover the same.
             184          (4) (a) If a lien claimant files an action to enforce a lien filed under this chapter
             185      involving a residence, as defined in Section 38-11-102 , the lien claimant shall include with the
             186      service of the complaint on the owner of the residence:
             187          (i) instructions to the owner of the residence relating to the owner's rights under Title
             188      38, Chapter 11, Residence Lien Restriction and Lien Recovery Fund Act; and
             189          (ii) a form affidavit to enable the owner of the residence to specify the grounds upon
             190      which the owner may exercise available rights under Title 38, Chapter 11, Residence Lien
             191      Restriction and Lien Recovery Fund Act.
             192          (b) The instructions and form affidavit required by Subsection (4)(a) shall meet the
             193      requirements established by rule by the Division of Occupational and Professional Licensing in
             194      accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
             195          (c) If a lien claimant fails to provide to the owner of the residence the instructions and
             196      form affidavit required by Subsection (4)(a), the lien claimant shall be barred from maintaining
             197      or enforcing the lien upon the residence.
             198          (d) Judicial determination of the rights and liabilities of the owner of the residence
             199      under Title 38, Chapters 1 and 11, and Title 14, Chapter 2, shall be stayed until after the owner
             200      has been given a reasonable period of time to establish compliance with Subsections
             201      38-11-204 (4)(a) and (4)(b) through an informal proceeding, as set forth in Title 63, Chapter
             202      46b, Administrative Procedures Act, commenced within 30 days of the owner being served
             203      summons in the foreclosure action, at the Division of Occupational and Professional Licensing
             204      and obtain a certificate of compliance or denial of certificate of compliance, as defined in
             205      Section 38-11-102 .
             206          (e) An owner applying for a certificate of compliance under Subsection (4)(d) shall
             207      send by certified mail to all lien claimants;
             208          (i) a copy of the application for a certificate of compliance; and
             209          (ii) all materials filed in connection with the application.
             210          (f) The Division of Occupational and Professional Licensing shall notify all lien
             211      claimants listed in an owner's application for a certificate of compliance under Subsection


             212      (4)(e) of the issuance or denial of a certificate of compliance.
             213          (5) The written notice requirement applies to liens filed on or after July 1, 2004.
             214          Section 5. Section 38-1-27 (Effective 05/01/05) is amended to read:
             215           38-1-27 (Effective 05/01/05). State Construction Registry -- Form and contents of
             216      notice of commencement, preliminary notice, and notice of completion.
             217          (1) As used in this section and Sections 38-1-30 through 38-1-37 :
             218          (a) "Alternate filing" means a filing made in a manner established by the division under
             219      Subsection (2)(e) other than an electronic filing.
             220          (b) "Cancel" means to indicate that a filing is no longer given effect.
             221          (c) "Construction project," "project," or "improvement" means:
             222          (i) a specific project or improvement for which one building permit is issued; or
             223          (ii) if no building permit is required, the improvement or work required by a contract
             224      between the owner and an original contractor under Section 38-1-2 .
             225          [(a)] (d) "Database" means the State Construction [Notice] Registry [Database] created
             226      in this section.
             227          [(b)] (e) (i) "Designated agent" means the third party the Division of Occupational and
             228      Professional Licensing contracts with to create and maintain the State Construction [Notice]
             229      Registry [Database].
             230          (ii) The designated agent is not an agency, instrumentality, or a political subdivision of
             231      the state.
             232          [(c)] (f) "Division" means the Division of Occupational and Professional Licensing.
             233          (g) "Interested person" means a person who may be affected by a construction project.
             234          [(d)] (h) "Program" means the State Construction [Notice] Registry [Database]
             235      Program created in this section.
             236          (2) Subject to receiving adequate funding through a legislative appropriation and
             237      contracting with an approved third party vendor who meets the requirements of Sections
             238      38-1-30 through 38-1-37 , there is created the State Construction [Notice] Registry [Database]
             239      Program [which] that shall:
             240          (a) (i) assist in protecting public health, safety, and welfare; and
             241          (ii) promote a fair working environment;
             242          (b) be overseen by the division with the assistance of the designated agent;


             243          (c) provide a central repository for notices of commencement, preliminary notices, and
             244      notices of completion filed in connection with all privately owned construction projects as well
             245      as all state and local government owned construction projects throughout Utah;
             246          (d) be accessible for filing and review [of] by way of the program Internet website of:
             247          (i) notices of commencement[,];
             248          (ii) preliminary notices[,]; and
             249          (iii) notices of completion [via the program Internet website];
             250          (e) accommodate:
             251          (i) electronic filing of [such notices as well as provide for] the notices described in
             252      Subsection (2)(d); and
             253          (ii) alternate filing of the notices described in Subsection (2)(d) by U.S. mail, telefax,
             254      [telephone,] or any other alternate method as provided by rule made by the division in
             255      accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act;
             256          (f) (i) provide electronic notification for up to three e-mail addresses for each interested
             257      person or company who requests notice from the construction notice registry [as well as]; and
             258          (ii) provide alternate means of notification for [those persons] a person who [make]
             259      makes an alternate [filings] filing, including U.S. mail, telefax, or any other method as
             260      prescribed by rule made by the division in accordance with Title 63, Chapter 46a, Utah
             261      Administrative Rulemaking Act; and
             262          (g) provide hard-copy printing of electronic receipts for an individual [filings] filing
             263      evidencing the date and time of the individual [filings as well as] filing and the content of the
             264      individual [filings] filing.
             265          (3) (a) [Persons interested in a construction project] An interested person may request
             266      notice of filings related to [the] a project.
             267          (b) The database shall be indexed by:
             268          (i) owner name[,];
             269          (ii) original contractor name[,];
             270          (iii) subdivision, development, or other project name, if any;
             271          (iv) project address[,];
             272          (v) lot or parcel number[,];
             273          (vi) unique project number[,] assigned by the designated agent; and


             274          (vii) any other identifier that the division considers reasonably appropriate [and
             275      established by rule, made in accordance with Title 63, Chapter 46a, Utah Administrative
             276      Rulemaking Act] in collaboration with the designated agent.
             277          (4) (a) In accordance with [Title 63, Chapter 46a, Utah Administrative Rulemaking
             278      Act,] the process required by Section 63-38-3.2 , the division shall establish [by rule] the
             279      [filing] fees for [notices]:
             280          (i) a notice of commencement[,];
             281          (ii) a preliminary [notices, notices] notice;
             282          (iii) a notice of completion[, and requests];
             283          (iv) a request for notice[, which fees may not exceed the amount reasonably necessary
             284      to create and maintain the database.];
             285          (v) providing a required notice by an alternate method of delivery;
             286          (vi) a duplicate receipt of a filing; and
             287          (vii) account setup for a person who wishes to be billed periodically for filings with the
             288      database.
             289          (b) The fees allowed under Subsection (4)(a) may not exceed the amount reasonably
             290      necessary to create and maintain the database.
             291          [(b)] (c) The fees established by the division may vary by method of filing if one form
             292      of filing is more costly than [other forms] another form of filing.
             293          (d) Notwithstanding Subsection 63-38-3.2 (2)(c), the division need not submit the fee
             294      schedule for fees allowed by this Subsection (4) to the Legislature until the 2006 General
             295      Session.
             296          (e) The division may provide by contract that the designated agent may retain all fees
             297      collected by the designated agent except that the designated agent shall remit to the division the
             298      cost of the division's oversight under Subsection (2)(b).
             299          (5) The following are not an adjudicative proceeding under Title 63, Chapter 46b,
             300      Administrative Procedures Act:
             301          (a) the filing of a notice permitted by this chapter;
             302          (b) the rejection of a filing permitted by this chapter; or
             303          (c) other action by the designated agent in connection with a filing of any notice
             304      permitted by this chapter.


             305          (6) The division and the designated agent need not determine the timeliness of any
             306      notice before filing the notice in the database.
             307          (7) (a) A person who is delinquent on the payment of a fee established under
             308      Subsection (4) may not file a notice with the database.
             309          (b) A determination that a person is delinquent on the payment of a fee for filing
             310      established under Subsection (4) shall be made in accordance with Title 63, Chapter 46b,
             311      Administrative Procedures Act.
             312          (c) Any order issued in a proceeding described in Subsection (7)(b) may prescribe the
             313      method of that person's payment of fees for filing notices with the database after issuance of the
             314      order.
             315          Section 6. Section 38-1-30 is amended to read:
             316           38-1-30. Third party contract -- Designated agent.
             317          (1) The division shall contract in accordance with Title 63, Chapter 56, Utah
             318      Procurement Code, with a third party to establish and maintain the database for the purposes
             319      established under this section, Section 38-1-27 , and Sections 38-1-31 through 38-1-37 .
             320          (2) (a) The third party under contract under this section is the division's designated
             321      agent, and shall develop and maintain a database from the information provided by:
             322          (i) local government entities issuing building permits;
             323          (ii) original contractors;
             324          (iii) subcontractors; and
             325          (iv) other interested persons.
             326          (b) The division and the designated agent shall design, develop, and test the database
             327      for full implementation on May 1, 2005.
             328          (3) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             329      division shall make rules and develop procedures for:
             330          (a) the division to oversee and enforce this section, Section 38-1-27 , and Sections
             331      38-1-31 through 38-1-37 ; [and]
             332          (b) the designated agent to administer this section, Section 38-1-27 , and Sections
             333      38-1-31 through 38-1-37 [.]; and
             334          (c) the form of submission of an alternate filing.
             335          (4) (a) The designated agent shall archive computer data files at least semiannually for


             336      auditing purposes.
             337          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             338      division shall make rules to allow the designated agent[, unless requested otherwise by an
             339      interested party for a particular project,] to periodically archive [and purge completed or
             340      inactive] projects from the database[:].
             341          (c) A project shall be archived no earlier than:
             342          (i) [no earlier than] one year after the day on which a notice of [commencement]
             343      completion is filed for a [particular] project; [or]
             344          (ii) if no notice of [commencement] completion is filed, [no earlier than] two years
             345      after the last filing activity for a [particular] project[.]; or
             346          (iii) one year after the day on which a filing is cancelled under Subsection
             347      38-1-32 (3)(c) or 38-1-33 (2)(c).
             348          [(c)] (d) The division may audit the designated agent's administration of the database as
             349      often as the division considers necessary.
             350          (5) The designated agent shall carry errors and omissions insurance in the amounts
             351      established by rule made by the division in accordance with Title 63, Chapter 46a, Utah
             352      Administrative Rulemaking Act.
             353          Section 7. Section 38-1-31 (Effective 05/01/05) is amended to read:
             354           38-1-31 (Effective 05/01/05). Building permit -- Construction -- Notice registry --
             355      Notice of commencement of work.
             356          (1) (a) (i) For a construction project where a building permit is issued, within 15 days
             357      after the issuance of the building permit, the local government entity issuing that building
             358      permit shall input the [data] building permit application and transmit the building permit
             359      information to the database electronically [via] by way of the Internet or computer modem or
             360      by any other means and such information shall form the basis of a notice of commencement.
             361          (ii) For the purposes of classifying a record under Title 63, Chapter 2, Government
             362      Records Access and Management Act, building permit information transmitted from a local
             363      governmental entity to the database shall be classified in the database by the division
             364      notwithstanding the local governmental entity's classification of the building permit
             365      information.
             366          (b) For a construction project where a building permit is not issued, within 15 days


             367      after commencement of physical construction work at the project site, the original contractor
             368      shall file a notice of commencement with the database.
             369          (c) An owner of construction, a lender, surety, or other interested [party] person may
             370      file a notice of commencement with the designated agent within the [prescribed] time [set forth
             371      in Subsection] prescribed by Subsections (1)(a) and (b).
             372          (d) If duplicate notices of commencement are filed, they shall be combined into one
             373      notice for each project. The designated agent shall assign each construction project a unique
             374      project number [which] that:
             375          (i) identifies each construction project; and
             376          (ii) can be associated with all notices of commencement, preliminary notices, and
             377      notices of completion.
             378          (e) (i) A notice of commencement is effective as to all [work, materials, and
             379      equipment] labor, service, equipment, and material furnished to the construction project after
             380      the filing of the notice of commencement.
             381          (ii) A notice of commencement is effective only as to the [work, materials, or
             382      equipment] labor, service, equipment, and material furnished to the construction project that is
             383      provided subsequent to the filing of the notice of commencement.
             384          (2) (a) The content of a notice of commencement shall include the following [if
             385      available on a building permit]:
             386          [(a)] (i) the name and address of the owner of the project [or improvement];
             387          [(b)] (ii) the name and address of the:
             388          [(i)] (A) original contractor; and
             389          [(ii)] (B) surety providing any payment bond for the project [or improvement], or if
             390      none exists, a statement that a payment bond was not required for the work being performed;
             391          [(c) (i)] (iii) (A) the project address if the project can be reasonably identified by an
             392      address; or
             393          [(ii)] (B) the name and general description of the location of the project if the project
             394      cannot be reasonably identified by an address;
             395          [(d)] (iv) a general description of the project; and
             396          [(e)] (v) the lot or parcel number, and any subdivision, development, or other project
             397      name, of the real property upon which the project is to be constructed if the project is subject to


             398      mechanics' liens[; and].
             399          [(f) a legal description of the property on which the project is located if the project is
             400      subject to mechanics' liens.]
             401          (b) The content of a notice of commencement need not include all of the items listed in
             402      Subsection (2)(a) if:
             403          (i) a building permit is issued for the project; and
             404          (ii) all items listed in Subsection (2)(a) that are available on the building permit are
             405      included in the notice of commencement.
             406          (3) [Failure to file any] If a notice of commencement for a construction project
             407      [suspends the operation of] is not filed within 15 days after the day on which a building permit
             408      is issued, the following do not apply:
             409          (a) [the preliminary notice provisions of] Section 38-1-32 ; and
             410          (b) [the notice of completion provisions of] Section 38-1-33 .
             411          (4) (a) [Electronic] Unless a person indicates to the division or designated agent that
             412      the person does not wish to receive a notice under this section, electronic notice of the filing of
             413      a notice of commencement or alternate notice as prescribed in Subsection (1), shall be provided
             414      to:
             415          [(a)] (i) all persons who have filed notices of commencement for the project; and
             416          [(b)] (ii) all interested [parties] persons who have requested such notice for the project.
             417          (b) (i) A person to whom notice is required under Subsection (4)(a) is responsible for:
             418          (A) providing an e-mail address, mailing address, or telefax number to which a notice
             419      required by Subsection (4)(a) is to be sent; and
             420          (B) the accuracy of any e-mail address, mailing address, or telefax number to which
             421      notice is to be sent.
             422          (ii) The designated agent fulfills the notice requirement of Subsection (4)(a) when it
             423      sends the notice to the e-mail address, mailing address, or telefax number provided to the
             424      designated agent whether or not the notice is actually received.
             425          (5) The burden is upon any person seeking to enforce the notice of commencement to
             426      prove that the notice of commencement is filed timely and meets all of the requirements in this
             427      section.
             428          (6) At the time a building permit is obtained, each original contractor shall


             429      conspicuously post at the project site a copy of [each] the building permit obtained for the
             430      project [improvement].
             431          Section 8. Section 38-1-32 (Effective 05/01/05) is amended to read:
             432           38-1-32 (Effective 05/01/05). Preliminary notice -- Subcontractor or supplier.
             433          (1) (a) (i) A subcontractor or supplier shall file a preliminary notice with the database
             434      within the later of:
             435          (A) [Within] 20 days after commencement of its own work or the commencement of
             436      furnishing [materials or equipment] labor, service, equipment, and material to a construction
             437      project[, a subcontractor or supplier shall file a preliminary notice with the construction notice
             438      registry.]; or
             439          (B) 20 days after the filing of a notice of commencement.
             440          (ii) A preliminary notice filed within the [20-day] period described in Subsection
             441      (1)(a)(i) is effective as to all [work, materials, and equipment] labor, service, equipment, and
             442      material furnished to the construction project, including labor, service, equipment, and material
             443      provided to more than one contractor or subcontractor.
             444          (b) If a subcontractor or supplier files a preliminary notice after the [20-day] period
             445      prescribed by Subsection (1)(a), the preliminary notice becomes effective [as of] five days after
             446      the [filing of the] day on which the preliminary notice is filed.
             447          (c) Failure to file a preliminary notice within the [20-day] period required by
             448      Subsection (1)(a) precludes a subcontractor or supplier from filing any claim for compensation
             449      earned for performance of [work] labor or service or supply of materials or equipment
             450      furnished to the construction project before the expiration of five days after the late filing of a
             451      preliminary notice, except as against the person with whom the subcontractor or supplier
             452      contracted.
             453          (d) (i) The preliminary notice must be filed before a notice of lien may be filed with the
             454      county recorder pursuant to Section 38-1-7 .
             455          (ii) The content of a preliminary notice shall include the following:
             456          [(i)] (A) the name, address, and telephone number of the person furnishing the labor,
             457      service, equipment, or material;
             458          [(ii)] (B) the name and address of the person who contracted with the claimant for the
             459      furnishing of the labor, service, equipment, or material;


             460          [(iii)] (C) the name of the record or reputed owner of the project [or improvement];
             461          [(iv)] (D) the name of the original contractor under which the claimant is performing or
             462      will perform its work; and
             463          [(v)] (E) the address of the project [or improvement] or a description of the location of
             464      the project [or improvement].
             465          (2) (a) (i) [Electronic] Unless a person indicates to the division or designated agent that
             466      the person does not wish to receive a notice under this section, electronic notification of the
             467      filing of a preliminary notice or alternate notice as prescribed in Subsection (1), shall be
             468      provided to:
             469          [(i)] (A) the person filing the preliminary notice;
             470          [(ii)] (B) each person that filed a notice of commencement for the project; and
             471          [(iii)] (C) all interested [parties] persons who have requested such notice for the
             472      project.
             473          (ii) A person to whom notice is required under Subsection (2)(a)(i) is responsible for:
             474          (A) providing an e-mail address, mailing address, or telefax number to which a notice
             475      required by Subsection (2)(a) is to be sent; and
             476          (B) the accuracy of any e-mail address, mailing address, or telefax number to which
             477      notice is to be sent.
             478          (iii) The designated agent fulfills the notice requirement of Subsection (2)(a)(i) when it
             479      sends the notice to the e-mail address, mailing address, or telefax number provided to the
             480      designated agent whether or not the notice is actually received.
             481          (b) The burden is upon the person filing the preliminary notice to prove that the
             482      preliminary notice is filed timely and substantially meets all of the requirements of this section.
             483          (c) Subject to Subsection (1)(d), a person required by this section to give preliminary
             484      notice is only required to give one notice for each project [or improvement, which may include
             485      an entire structure or a scheme of improvements].
             486          (d) If the labor, service, equipment, or material is furnished pursuant to contracts under
             487      more than one original contract, the notice requirements must be met with respect to the labor,
             488      service, equipment, or [materials] material furnished under each original contract.
             489          (3) (a) If a construction project owner, original contractor, subcontractor, or other
             490      interested person believes that a preliminary notice has been filed erroneously, that owner,


             491      original contractor, subcontractor, or other interested person can request from the person who
             492      filed the preliminary notice evidence establishing the validity of the preliminary notice.
             493          (b) Within ten days after the request described in Subsection (3)(a), the person or entity
             494      that filed the preliminary notice shall provide the requesting person or entity proof that the
             495      preliminary notice is valid.
             496          (c) If the person or entity that filed the preliminary notice [cannot] does not provide
             497      proof of the validity of the preliminary notice, that person or entity shall immediately [remove]
             498      cancel the preliminary notice from the database in any manner prescribed by the division
             499      pursuant to rule.
             500          Section 9. Section 38-1-33 (Effective 05/01/05) is amended to read:
             501           38-1-33 (Effective 05/01/05). Notice of completion.
             502          (1) (a) (i) Upon final completion of a construction project, an owner of a construction
             503      project, an original contractor, a lender that has provided financing for the construction project,
             504      or surety that has provided bonding for the construction project, may file a notice of completion
             505      with the database.
             506          (ii) Final completion, for purposes of this Subsection (1), shall mean:
             507          [(i)] (A) if as a result of work performed under the original contract a permanent
             508      certificate of occupancy is required for such work, the date of issuance of a permanent
             509      certificate of occupancy by the local government entity having jurisdiction over the
             510      construction project;
             511          [(ii)] (B) if no certificate of occupancy is required by the local government entity
             512      having jurisdiction over the construction project, but as a result of the work performed under
             513      the original contract an inspection is required for such work, the date of the final inspection for
             514      such work by the local government entity having jurisdiction over the construction project; or
             515          [(iii)] (C) if with regard to the work performed under the original contract no certificate
             516      of occupancy and no final inspection are required by the local government entity having
             517      jurisdiction over the construction project, the date on which there remains no substantial work
             518      to be completed to finish such work on the original contract.
             519          (b) Notwithstanding Section 38-1-2 , where a subcontractor performs substantial work
             520      after the applicable dates established by Subsections (1)(a)(i) and (ii), that subcontractor's
             521      subcontract shall be considered an original contract for the sole purpose of determining:


             522          (i) the subcontractor's time frame to file a notice to hold and claim a lien under
             523      Subsection 38-1-7 (1); and
             524          (ii) the original contractor's time frame to file a notice to hold and claim a lien under
             525      Subsection 38-1-7 (1) for that subcontractor's work.
             526          (c) For purposes of this section, the term "substantial work" does not include:
             527          (i) repair work; or
             528          (ii) warranty work[; or].
             529          [(iii) work for which the project owner is not holding payment to ensure completion of
             530      that work.]
             531          (d) Notwithstanding Subsection (1)(a)(ii)(C), final completion of the original contract
             532      does not occur if work remains to be completed for which the owner is holding payment to
             533      ensure completion of the work.
             534          [(d)] (e) (i) [Electronic] Unless a person indicates to the division or designated agent
             535      that the person does not wish to receive a notice under this section, electronic notification of
             536      the filing of a notice of completion or alternate notice as prescribed in Subsection (1)(a), shall
             537      be provided to:
             538          (A) each person that filed a notice of commencement for the project;
             539          (B) each person that filed preliminary notice for the project; and
             540          (C) all interested [parties] persons who have requested notice for the project.
             541          (ii) A person to whom notice is required under Subsection (1)(d) is responsible for:
             542          (A) providing an e-mail address, mailing address, or telefax number to which a notice
             543      required by Subsection (4)(a) is to be sent; and
             544          (B) the accuracy of any e-mail address, mailing address, or telefax number to which
             545      notice is to be sent.
             546          (iii) The designated agent fulfills the notice requirement of Subsection (1)(d)(ii) when
             547      it sends the notice to the e-mail address, mailing address, or telefax number provided to the
             548      designated agent, whether or not the notice is actually received.
             549          [(ii)] (iv) Upon the filing of a notice of completion, the time periods for filing
             550      preliminary notices stated in Section 38-1-27 are modified such that all preliminary notices
             551      shall be filed subsequent to the notice of completion and [shall be filed] within ten days from
             552      the day on which the notice of completion is filed.


             553          [(e)] (f) A subcontract that is considered an original contract for purposes of this
             554      section shall not create a requirement for an additional preliminary notice if a preliminary
             555      notice has already been given for [materials and] the labor, service, equipment, and material
             556      furnished to the subcontractor who performs substantial work.
             557          (2) (a) If a construction project owner, original contractor, subcontractor, or other
             558      interested person believes that a notice of completion has been filed erroneously, that owner,
             559      original contractor, subcontractor, or other interested person can request from the person who
             560      filed the preliminary notice evidence establishing the validity of the notice of completion.
             561          (b) Within ten days after the request described in Subsection (2)(a), the person that
             562      filed the notice of completion shall provide the requesting person proof that the notice of
             563      completion is valid.
             564          (c) If the person that filed the notice of completion [cannot] does not provide proof of
             565      the validity of the notice of completion, that person shall immediately [remove] cancel the
             566      notice of completion from the database in any manner prescribed by the division pursuant to
             567      rule.
             568          Section 10. Section 38-1-37 (Effective 05/01/05) is amended to read:
             569           38-1-37 (Effective 05/01/05). Application of Section 38-1-27 and Sections 38-1-30
             570      through 38-1-36.
             571          (1) Except as provided in Subsection (3), Section 38-1-27 and Sections 38-1-30
             572      through 38-1-36 in effect as of May 1, 2005 shall apply to construction projects [commenced]
             573      for which a notice of commencement is filed on or after May 1, 2005.
             574          (2) A construction project [commenced] for which a notice of commencement is filed
             575      before May 1, 2005 is subject to the provisions of this chapter in effect prior to May 1, 2005.
             576          (3) (a) Section 38-1-27 and Sections 38-1-30 through 38-1-36 in effect as of May 1,
             577      2005, shall apply to a construction project for which a notice of commencement is filed on or
             578      after November 1, 2005 involving a residence, as defined in Subsection 38-11-102 (22).
             579          (b) For a construction project for which a notice of commencement is filed before
             580      November 1, 2005 involving a residence, as defined in Subsection 38-11-102 (22), the law in
             581      effect on April 30, 2005 shall govern.
             582          Section 11. Section 38-11-204 is amended to read:
             583           38-11-204. Claims against the fund -- Requirement to make a claim --


             584      Qualifications to receive compensation -- Qualifications to receive a certificate of
             585      compliance.
             586          (1) To claim recovery from the fund a person shall:
             587          (a) meet the requirements of either Subsection (4) or (7);
             588          (b) pay an application fee determined by the division under Section 63-38-3.2 ; and
             589          (c) file with the division a completed application on a form provided by the division
             590      accompanied by supporting documents establishing:
             591          (i) that the person meets the requirements of either Subsection (4) or (7);
             592          (ii) that the person was a qualified beneficiary or laborer during the construction on the
             593      owner-occupied residence; and
             594          (iii) the basis for the claim.
             595          (2) To recover from the fund, the application required by Subsection (1) shall be filed
             596      no later than one year:
             597          (a) from the date the judgment required by Subsection (4)(d) is entered;
             598          (b) from the date the nonpaying party filed bankruptcy, if the claimant is precluded
             599      from obtaining a judgment or from satisfying the requirements of Subsection (4)(d) because the
             600      nonpaying party filed bankruptcy within one year after the entry of judgment; or
             601          (c) from the date the laborer, trying to recover from the fund, completed the laborer's
             602      qualified services.
             603          (3) To obtain a certificate of compliance an owner or agent of the owner shall establish
             604      with the division that the owner meets the requirements of Subsections (4)(a) and (4)(b).
             605          (4) To recover from the fund, regardless of whether the residence is occupied by the
             606      owner, a subsequent owner, or the owner or subsequent owner's tenant or lessee, a qualified
             607      beneficiary shall establish that:
             608          (a) (i) the owner of the owner-occupied residence or the owner's agent entered into a
             609      written contract with an original contractor licensed or exempt from licensure under Title 58,
             610      Chapter 55, Utah Construction Trades Licensing Act:
             611          (A) for the performance of qualified services;
             612          (B) to obtain the performance of qualified services by others; or
             613          (C) for the supervision of the performance by others of qualified services in
             614      construction on that residence;


             615          (ii) the owner of the owner-occupied residence or the owner's agent entered into a
             616      written contract with a real estate developer for the purchase of an owner-occupied residence;
             617      or
             618          (iii) the owner of the owner-occupied residence or the owner's agent entered into a
             619      written contract with a factory built housing retailer for the purchase of an owner-occupied
             620      residence;
             621          (b) the owner has paid in full the original contractor, licensed or exempt from licensure
             622      under Title 58, Chapter 55, Utah Construction Trades Licensing Act, real estate developer, or
             623      factory built housing retailer under Subsection (4)(a) with whom the owner has a written
             624      contract in accordance with the written contract and any amendments to the contract;
             625          (c) (i) the original contractor, licensed or exempt from licensure under Title 58,
             626      Chapter 55, Utah Construction Trades Licensing Act, the real estate developer, or the factory
             627      built housing retailer subsequently failed to pay a qualified beneficiary who is entitled to
             628      payment under an agreement with that original contractor or real estate developer licensed or
             629      exempt from licensure under Title 58, Chapter 55, Utah Construction Trades Licensing Act, for
             630      services performed or materials supplied by the qualified beneficiary;
             631          (ii) a subcontractor who contracts with the original contractor, licensed or exempt from
             632      licensure under Title 58, Chapter 55, Utah Construction Trades Licensing Act, the real estate
             633      developer, or the factory built housing retailer failed to pay a qualified beneficiary who is
             634      entitled to payment under an agreement with that subcontractor or supplier; or
             635          (iii) a subcontractor who contracts with a subcontractor or supplier failed to pay a
             636      qualified beneficiary who is entitled to payment under an agreement with that subcontractor or
             637      supplier;
             638          (d) (i) the qualified beneficiary filed:
             639          (A) an action against the nonpaying party to recover monies owed to the qualified
             640      beneficiary within 180 days from the date the qualified beneficiary [last provided qualified
             641      services] filed a notice of claim under Section 38-1-7 , unless precluded from doing so by the
             642      nonpaying party's bankruptcy filing within the 180 days [after completion of services] from the
             643      date the qualified beneficiary filed the notice of claim; and
             644          (B) a notice of commencement of action with the division within 30 days from the date
             645      the qualified beneficiary filed the civil action if a civil action was filed as required by


             646      Subsection (4)(d)(i)(A);
             647          (ii) the qualified beneficiary has obtained a judgment against the nonpaying party who
             648      failed to pay the qualified beneficiary under an agreement to provide qualified services for
             649      construction of that owner-occupied residence;
             650          (iii) (A) the qualified beneficiary has:
             651          (I) obtained from a court of competent jurisdiction the issuance of an order requiring
             652      the judgment debtor, or if a corporation any officer of the corporation, to appear before the
             653      court at a specified time and place to answer concerning the debtor's or corporation's property;
             654          (II) received return of service of the order from a person qualified to serve documents
             655      under the Utah Rules of Civil Procedure, Rule 4(b); and
             656          (III) made reasonable efforts to obtain asset information from the supplemental
             657      proceedings; and
             658          (B) if assets subject to execution are discovered as a result of the order required under
             659      Subsection (4)(d)(iii)(A) or for any other reason, to obtain the issuance of a writ of execution
             660      from a court of competent jurisdiction; or
             661          (iv) the qualified beneficiary timely filed a proof of claim where permitted in the
             662      bankruptcy action, if the nonpaying party has filed bankruptcy;
             663          (e) the qualified beneficiary is not entitled to reimbursement from any other person;
             664      and
             665          (f) the qualified beneficiary provided qualified services to a contractor, licensed or
             666      exempt from licensure under Title 58, Chapter 55, Utah Construction Trades Licensing Act.
             667          (5) The requirements of Subsections (4)(d)(i), (ii), and (iii) need not be met if the
             668      qualified beneficiary has been precluded from obtaining a judgment against the nonpaying
             669      party or from satisfying the requirements of Subsections (4)(d)(i), (ii), and (iii) because the
             670      nonpaying party filed bankruptcy.
             671          (6) If a qualified beneficiary fails to file the notice with the division required under
             672      Subsection (4)(d)(i)(B), the claim of the qualified beneficiary shall be paid:
             673          (a) if otherwise qualified under this chapter;
             674          (b) to the extent that the limit of Subsection 38-11-203 (4)(a) has not been reached by
             675      payments from the fund to qualified beneficiaries who have complied with the notice
             676      requirements of Subsection (4)(d)(i)(B); and


             677          (c) in the order that the claims are filed by persons who fail to comply with Subsection
             678      (4)(d)(i)(B), not to exceed the limit of Subsection 38-11-203 (4)(a).
             679          (7) To recover from the fund a laborer shall:
             680          (a) establish that the laborer has not been paid wages due for the work performed at the
             681      site of a construction on an owner-occupied residence; and
             682          (b) provide any supporting documents or information required by rule by the division.
             683          (8) A fee determined by the division under Section 63-38-3.2 shall be deducted from
             684      any recovery from the fund received by a laborer.
             685          (9) The requirements of Subsections (4)(a) and (4)(b) may be satisfied if an owner or
             686      agent of the owner establishes to the satisfaction of the director that the owner of the
             687      owner-occupied residence or the owner's agent entered into a written contract with an original
             688      contractor who:
             689          (a) was a business entity that was not licensed under Title 58, Chapter 55, Utah
             690      Construction Trades Licensing Act, but was solely or partly owned by an individual who was
             691      licensed under Title 58, Chapter 55, Utah Construction Trades Licensing Act; or
             692          (b) was a natural person who was not licensed under Title 58, Chapter 55, Utah
             693      Construction Trades Licensing Act, but who was the sole or partial owner and qualifier of a
             694      business entity that was licensed under Title 58, Chapter 55, Utah Construction Trades
             695      Licensing Act.
             696          (10) The director shall have equitable power to determine if the requirements of
             697      Subsections (4)(a) and (4)(b) have been met, but any decision by the director under [Title 38,
             698      Chapter 11,] this chapter shall not alter or have any effect on any other decision by the division
             699      under Title 58, Occupations and Professions.
             700          Section 12. Section 63-56-38.1 (Superseded 05/01/05) is amended to read:
             701           63-56-38.1 (Superseded 05/01/05). Preliminary notice requirement.
             702          (1) Any person furnishing labor, service, equipment, or material for which a payment
             703      bond claim may be made under this chapter shall provide preliminary notice to the payment
             704      bond principal as prescribed by Section 38-1-27 , except that this section does not apply:
             705          (a) to a person who is in privity of contract with the payment bond principal;
             706          (b) to a person who contracts directly with the payment bond principal;
             707          [(b)] (c) to a person performing labor for wages; or


             708          [(c)] (d) if a notice of commencement is not filed as prescribed in Section 38-1-27 for
             709      the project or improvement for which labor, service, equipment, or material is furnished.
             710          (2) Any person who fails to provide the preliminary notice required by Subsection (1)
             711      may not make a payment bond claim under this chapter.
             712          (3) The preliminary notice required by Subsection (1) must be provided prior to
             713      commencement of any action on the payment bond.
             714          Section 13. Retrospective operation.
             715          (1) The amendments to Section 38-1-37 (Effective 05/01/05) have retrospective
             716      operation to May 1, 2005.
             717          (2) The amendments to Sections 14-1-20 (Superseded 05/01/05), 14-2-5 (Superseded
             718      05/01/05), and 63-56-38.1 (Superseded 05/01/05) have retrospective operation to April 30,
             719      2005.


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