S.B. 103

This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Mon, Jan 24, 2005 at 11:13 AM by rday. --> 1

LIENS ON AIRCRAFT
2 2005 GENERAL SESSION
3 STATE OF UTAH
4 Sponsor: Thomas V. Hatch
5
6 LONG TITLE
7 General Description:
8 This bill modifies lien provisions to enact the Aircraft Lien Act.
9 Highlighted Provisions:
10 This bill:
11 . addresses notice of lien;
12 . defines terms;
13 . addresses relationship to other lien statutes;
14 . preserves the right to collect on a debt;
15 . authorizes a lien against an aircraft by a repairman;
16 . requires that the lien be filed with the Federal Aviation Administration;
17 . authorizes foreclosure on an aircraft;
18 . authorizes taking possession of an aircraft;
19 . authorizes selling an aircraft;
20 . establishes priority of lien;
21 . addresses release of lien by posting bond; and
22 . makes technical changes.
23 Monies Appropriated in this Bill:
24 None
25 Other Special Clauses:
26 None
27 Utah Code Sections Affected:

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- 2 - 28 AMENDS:
29 38-12-102, as last amended by Chapter 370, Laws of Utah 2001
30 ENACTS:
31 38-13-101, Utah Code Annotated 1953
32 38-13-102, Utah Code Annotated 1953
33 38-13-103, Utah Code Annotated 1953
34 38-13-201, Utah Code Annotated 1953
35 38-13-202, Utah Code Annotated 1953
36 38-13-203, Utah Code Annotated 1953
37 38-13-204, Utah Code Annotated 1953
38 38-13-205, Utah Code Annotated 1953
39 38-13-206, Utah Code Annotated 1953
40
41 Be it enacted by the Legislature of the state of Utah:
42 Section 1. Section 38-12-102 is amended to read:
43 38-12-102. Notice requirements for lien filings -- Exceptions.
44 (1) [No later than 30 days after the day on which a lien claimant or the lien claimant's
45 authorized agent files for recordation a notice of lien meeting the requirements of Subsection
46 (2) with a county recorder, county clerk, or clerk of the court, a] A lien claimant or the lien
47 claimant's agent shall send by certified mail a written copy of the notice of lien to the
48 last-known address of the person against whom the notice of lien is filed[.] no later than 30
49 days after the day on which a lien claimant or the lien claimant's authorized agent files a notice
50 of lien meeting the requirements of Subsection (2):
51 (a) for recordation with:
52 (i) a county recorder;
53 (ii) a county clerk; or
54 (iii) a clerk of the court; or
55 (b) in the case of a lien on an aircraft under Section 38-13-201 , with the Federal
56 Aviation Administration.
57 (2) The notice of lien described in Subsection (1) shall contain the following
58 information:

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- 3 - 59 (a) the name and address of the person against whom the lien is filed;
60 (b) (i) a statement that certain property owned by the person against whom the lien is
61 filed is subject to a lien;
62 (ii) the amount of the judgment, settlement, or compromise if the lien is based on a
63 charge against or interest in a judgment, settlement, or compromise; or
64 (iii) the amount of state taxes owed;
65 (c) the article number contained on the certified mail receipt;
66 (d) the date the notice of lien was filed; and
67 (e) the name and address of the lien claimant.
68 (3) The notice requirements of Subsections (1) and (2) do not apply to:
69 (a) a mechanics' lien as provided in Title 38, Chapter 1, Mechanics' Liens;
70 (b) a lessors' lien as provided in Title 38, Chapter 3, Lessors' Liens;
71 (c) a federal tax lien as provided in Title 38, Chapter 6, Federal Tax Liens;
72 (d) a hospital lien as provided in Title 38, Chapter 7, Hospital Lien Law;
73 (e) a self-service storage facilities lien as provided in Title 38, Chapter 8, Self-Service
74 Storage Facilities;
75 (f) an oil, gas, or mining lien as provided in Title 38, Chapter 10, Oil, Gas, and Mining
76 Liens;
77 (g) a claim against the Residence Lien Recovery Fund as provided in Title 38, Chapter
78 11, Residence Lien Restriction and Lien Recovery Fund Act;
79 (h) a trust deed;
80 (i) a mortgage;
81 (j) any interests subject to a security agreement as defined in Section 70A-9a-102 ;
82 (k) any other liens subject to the same or stricter notice requirements than those
83 imposed by Subsections (1) and (2); or
84 (l) a court judgment or abstract of a court judgment presented for recording in the
85 office of a county recorder.
86 Section 2. Section 38-13-101 is enacted to read:
87 CHAPTER 13. AIRCRAFT LIEN ACT
88 Part 1. General Provisions
89 38-13-101. Title.

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Senate 2nd Reading Amendments 1-24-2005 rd/po 90

This chapter is known as the "Aircraft Lien Act."
91 Section 3. Section 38-13-102 is enacted to read:
92 38-13-102. Definitions.
93 As used in this chapter:
94 (1) "Aircraft" is as defined in Section 72-10-102 .
95 (2) "Repairman" means a person who makes, alters, repairs, or performs labor on an
96 aircraft.
97 Section 4. Section 38-13-103 is enacted to read:
98 38-13-103. Scope of chapter.
99 (1) This chapter may not be interpreted to impair or affect the right of any person to
100 whom a debt may be due for any work performed or materials furnished to maintain a personal
101 action to recover the same.
102 (2) This chapter supersedes Sections 38-2-3 and 38-2-4 as it relates to a lien for a
103 repairman making, altering, repairing, or performing labor on an aircraft.
104 Section 5. Section 38-13-201 is enacted to read:
105 Part 2. Lien Provisions
106 38-13-201. Lien on aircraft -- Filing required -- Notice -- Release.
107 (1) A repairman who makes, alters, repairs, or performs labor on an aircraft at the
108 request of the owner or other person entitled to possession of the aircraft shall have a lien upon
109 the aircraft for the reasonable value of the following furnished and used in making the aircraft
110 or in altering or repairing the aircraft:
111 (a) the labor performed; and
112 (b) materials.
113 (2) A repairman may retain possession of the aircraft until the amount due under
114 Subsection (1) is paid S , SUBJECT TO THE RIGHTS AND INTERESTS OF ANY SECURED PARTY IN
114a THE AIRCRAFT THAT HAS PRIORITY IN ACCORDANCE WITH SECTION 38-13-205 OVER THE LIEN
114b IMPOSED UNDER THIS CHAPTER UNLESS THE SECURED PARTY REQUESTED THAT THE
114c REPAIRMAN MAKE, ALTER, REPAIR, OR PERFORM LABOR ON THE AIRCRAFT s .
115 (3) (a) For a lien to be valid, a repairman shall file the lien with the Federal Aviation
116 Administration within 90 days of the last day on which the repairman makes, alters, repairs, or
117 performs labor on the aircraft.
118 (b) In addition to any requirements of 14 C.F.R. Part 49, Recording of Aircraft Titles
119 and Security Documents, the lien filing required by Subsection (3)(a) shall:

120 (i) comply with Subsection 38-12-102 (2); and

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- 5 - 121 (ii) include:
122 (A) the United States Registration Number, make, model, and serial number of the
123 aircraft subject to the lien;
124 (B) the name of the manufacturer, the model, and the serial number of any engine,
125 propeller, or appliance subject to the lien, to the extent that it is not otherwise identifiable by
126 reference to the United States Registration Number;
127 (C) the amount of the lien; and
128 (D) a narrative statement describing the nature of the labor performed.
129 (c) Notwithstanding the day on which the repairman files a lien with the Federal
130 Aviation Administration, a lien filed with the Federal Aviation Administration is effective
131 beginning the last day on which the repairman makes, alters, repairs, or performs labor on the
132 aircraft.
133 (4) A repairman shall send a notice of lien to the person against whom the notice of
134 lien is filed in accordance with Section 38-12-102 .
135 (5) If the repairman is paid amounts owed under this section, the repairman shall file a
136 release of lien with the Federal Aviation Administration.
137 Section 6. Section 38-13-202 is enacted to read:
138 38-13-202. Foreclosure on a lien.
139 (1) A repairman shall file a foreclosure action in a court of competent jurisdiction to
140 enforce the lien filed under this chapter within 180 days from the day on which the repairman
141 sends notice of the lien in accordance with Section 38-12-102 .
142 (2) In a foreclosure action filed under this section, the repairman or the repairman's
143 attorney shall show by complaint to the court:
144 (a) that the repairman made, altered, repaired, or performed labor on the aircraft that
145 entitles the repairman to a lien under this chapter;
146 (b) that the owner or other person entitled to possession of the aircraft requested that
147 the repairman make, alter, repair, or perform labor described in Subsection (2)(a);
148 (c) that the repairman sent notice of the lien in accordance with Sections 38-12-102
149 and 38-13-201 ;
150 (d) that the person against whom the lien is filed failed to pay the amount owed within
151 30 days of the day on which the repairman sent the notice of lien described in Subsection

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- 6 - 152 (2)(c); and
153 (e) an itemized description of the amounts owed.
154 (3) In a foreclosure action, the amount claimed by the repairman may include:
155 (a) work performed;
156 (b) materials;
157 (c) interest;
158 (d) storage fees charged; and
159 (e) any costs incurred by the repairman for using enforcement procedures under this
160 chapter, including attorneys' fees.
161 Section 7. Section 38-13-203 is enacted to read:
162 38-13-203. Repossession of aircraft.
163 (1) If a repairman is not in possession of the aircraft under Section 38-13-201 , a
164 repairman may take possession of an aircraft to recover the amounts owed under a lien imposed
165 by this chapter if:
166 (a) the repairman obtains a foreclosure judgment under Section 38-13-202 ;
167 (b) the repairman provides written notice of the intent to take possession of the aircraft:
168 (i) to:
169 (A) the owner of the aircraft; and
170 (B) any person described in Subsection 38-13-204 (1)(b); and
171 (ii) at least 15 days before the day on which the repairman takes possession of the
172 aircraft;
173 (c) the aircraft is in the possession of one of the following if that person requested that
174 the repairman make, alter, repair, or perform labor on the aircraft:
175 (i) the owner of the aircraft; or
176 (ii) other person entitled to possession of the aircraft; and
177 (d) the person described in Subsection (1)(c) has not paid the amount owed under this
178 chapter before the day on which the repairman takes possession of the aircraft.
179 (2) Subject to the other requirements of this section, a repairman may take possession
180 of an aircraft under this section:
181 (a) pursuant to judicial process; or
182 (b) without judicial process, if the transfer of possession of the aircraft proceeds

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- 7 - 183 without breach of the peace.
184 Section 8. Section 38-13-204 is enacted to read:
185 38-13-204. Selling the aircraft.
186 (1) A repairman may sell an aircraft subject to a lien under this chapter if:
187 (a) the repairman receives a judgment in the foreclosure action filed under Section
188 38-12-201 ;
189 (b) the repairman gives notice to:
190 (i) the owner of the aircraft;
191 (ii) the customer as indicated on the work order for the making, altering, repairing, or
192 performing of labor; and
193 (iii) all other persons claiming an interest in or lien on the aircraft:
194 (A) as disclosed by the records of the Federal Aviation Administration or of
195 corresponding agencies of any state in which the aircraft appears registered; and
196 (B) that is known by the repairman;
197 (c) the notice required by Subsection (1)(b) is sent by certified mail at least 30 days
198 before the proposed or scheduled date of any sale; and
199 (d) the notice required by Subsection (1)(b) contains:
200 (i) a description of the aircraft and its location;
201 (ii) the name and address of each person described in Subsection (1)(b);
202 (iii) the name, address, and telephone number of the repairman;
203 (iv) notice:
204 (A) that the repairman has a foreclosure judgment against the aircraft for the amount
205 stated in the judgment;
206 (B) of the cash sum which, if paid to the repairman would be sufficient to redeem the
207 aircraft from the lien claimed by the repairman;
208 (C) that the lien claimed by the repairman is subject to enforcement under this chapter;
209 and
210 (D) that the aircraft may be sold to satisfy the lien;
211 (v) the date, time, and location of any proposed or scheduled sale of the aircraft;
212 (vi) notice as to whether the sale is private or public; and
213 (vii) notice that the owner of the aircraft or other person entitled to possession of the

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- 8 - 214 aircraft has a right to recover possession of the aircraft without instituting judicial proceedings
215 by posting a bond in accordance with Section 38-13-206 .
216 (2) The repairman shall at least 20 days before the proposed or scheduled date of sale
217 of the aircraft publish the notice required by this section once in a newspaper circulated in the
218 county where the aircraft is held if:
219 (a) the owner of the aircraft is unknown;
220 (b) the whereabouts of the owner of the aircraft cannot be determined; or
221 (c) the owner of the aircraft or any person notified under Subsection (1)(b) fails to
222 acknowledge receipt of the notice.
223 (3) (a) An aircraft subject to lien enforcement under this chapter may be sold by the
224 repairman at public or private sale.
225 (b) Notwithstanding Subsection (3)(a), in the case of a private sale, every aspect of the
226 sale, including the method, manner, time, place, and terms shall be commercially reasonable.
227 (4) This section may not be construed to affect an owner's right to redeem the owner's
228 aircraft from the lien at any time prior to sale by paying the amount claimed by the repairman
229 for:
230 (a) work performed;
231 (b) materials;
232 (c) interest;
233 (d) storage fees charged; and
234 (e) any costs incurred by the repairman for using enforcement procedures under this
235 chapter, including attorneys' fees.
236 (5) The proceeds of a sale under this section shall be distributed as follows:
237 (a) amounts owed persons having a security interest or lien on the aircraft shall be paid
238 in the order that they have priority in accordance with Section 38-13-205 ; and
239 (b) the amount remaining after the amount described in Subsection (5)(a) is paid shall
240 be paid to the owner of the aircraft before the sale of the aircraft under this section.
241 (6) An aircraft against which a lien is filed may not be sold earlier than the later of:
242 (a) 45 days after the last day on which the repairman makes, alters, repairs, or performs
243 labor on the aircraft; or
244 (b) 30 days from the date on which the repairman sends notice of the lien in accordance

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Senate 2nd Reading Amendments 1-24-2005 rd/po 245

with Section 38-12-102 .
246 Section 9. Section 38-13-205 is enacted to read:
247 38-13-205. Priority of liens.
248 S [ A ] (1) EXCEPT AS PROVIDED IN SUBSECTION (2), A s lien imposed under this chapter has
248a priority over any lien, mortgage, security interest,
249 or other encumbrance arising after the day on which the lien is effective in accordance with
250 Section 38-13-201 .
250a S (2) THE LIEN IMPOSED UNDER THIS CHAPTER DOES NOT HAVE PRIORITY OVER A LIEN IMPOSED
250b PURSUANT TO TITLE 59, CHAPTER 2, PROPERTY TAX ACT. s
251 Section 10. Section 38-13-206 is enacted to read:
252 38-13-206. Release of aircraft by posting a bond.
253 (1) The owner or other person entitled to possession of the aircraft may have the
254 aircraft released from any lien claimed on it under this chapter by filing with the clerk of a
255 court of competent jurisdiction a cash or surety bond, payable to the person claiming the lien,
256 and conditioned for the payment of any judgment that may be recovered on the lien, with costs,
257 interest, and storage fees.
258 (2) (a) The repairman has 60 days after the day on which the repairman receives notice
259 that the owner or other person entitled to possession of the aircraft has filed the bond provided
260 in Subsection (1) to file suit to foreclose the repairman's lien.
261 (b) If the repairman fails to timely file an action, the clerk of the court shall release the
262 bond.
263 (3) (a) If an owner or other person entitled to possession of the aircraft files a bond as
264 provided in Subsection (1), the clerk of the court shall provide that person with evidence that
265 the bond has been filed.
266 (b) The owner or other person entitled to possession of the aircraft shall file the
267 evidence of a bond provided under Subsection (3)(a) with the Federal Aviation Administration.
268 (c) Filing the evidence provided in Subsection (3)(a) with the Federal Aviation
269 Administration releases the lien on the aircraft if the repairman fails to foreclose on the lien
270 within 60 days of the day on which the repairman receives notice that the owner or other person
271 entitled to possession of the aircraft filed the bond.

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Legislative Review Note
as of 1-4-05 10:54 AM

Based on a limited legal review, this legislation has not been determined to have a high
probability of being held unconstitutional.

Office of Legislative Research and General Counsel