H.B. 20

1

WRONGFUL DOCUMENTS
2 2013 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: R. Curt Webb
5 Senate Sponsor: ____________
6
7 LONG TITLE
8 Committee Note:
9 The Political Subdivisions Interim Committee recommended this bill.
10 General Description:
11 This bill relates to documents submitted to county recorders for recording that are
12 claimed to be wrongful.
13 Highlighted Provisions:
14 This bill:
15 . modifies provisions relating to documents submitted for recording which are
16 claimed to establish invalid liens;
17 . applies those provisions to documents submitted for recording that improperly
18 purport to release or extinguish a lawful lien or interest or reflect or establish a
19 claim or obligation against a person; and
20 . provides for joint and several liability for those who prepare, sign, or submit a
21 wrongful document.
22 Money Appropriated in this Bill:
23 None
24 Other Special Clauses:
25 None
26 Utah Code Sections Affected:
27 AMENDS:

28 38-9-1, as last amended by Laws of Utah 2010, Chapter 381
29 38-9-2, as last amended by Laws of Utah 2012, Chapter 278
30 38-9-3, as last amended by Laws of Utah 2010, Chapter 381
31 38-9-4, as last amended by Laws of Utah 2010, Chapter 381
32 38-9-6, as enacted by Laws of Utah 1997, Chapter 125
33 38-9-7, as enacted by Laws of Utah 1997, Chapter 125
34
35 Be it enacted by the Legislature of the state of Utah:
36 Section 1. Section 38-9-1 is amended to read:
37 CHAPTER 9. WRONGFUL DOCUMENTS
38 38-9-1. Definitions.
39 [As used in this chapter:]
40 [(1) "Interest holder" means a person who holds or possesses a present, lawful property
41 interest in certain real property, including an owner, title holder, mortgagee, trustee, or
42 beneficial owner.]
43 [(2) "Lien claimant" means a person claiming an interest in real property who offers a
44 document for recording or filing with any county recorder in the state asserting a lien, or notice
45 of interest, or other claim of interest in certain real property.]
46 (1) "Affected person" means a person who is:
47 (a) a record interest holder of the real property that is the subject of a recorded
48 wrongful document;
49 (b) the owner of personal property that is the subject of a recorded wrongful document;
50 or
51 (c) the person against whom a recorded wrongful document purports to reflect or
52 establish a claim or obligation.
53 (2) "Document sponsor" means a person who prepares, signs, or submits for recording
54 a document that is claimed to be a wrongful document.
55 (3) "Owner" means a person who has a vested ownership interest in [certain] real
56 property.
57 (4) (a) "Record interest holder":
58 (a) means a person who holds or possesses a present, lawful property interest in

59 [certain] real property, including an owner, titleholder, mortgagee, trustee, or beneficial owner,
60 and whose name and interest in that real property appears in the county recorder's records for
61 the county in which the property is located[.]; and
62 (b) ["Record interest holder"] includes any grantor in the chain of the title in [certain]
63 real property.
64 [(5) "Record owner" means an owner whose name and ownership interest in certain
65 real property is recorded or filed in the county recorder's records for the county in which the
66 property is located.]
67 [(6)] (5) "Wrongful [lien] document" means [any] a document that is submitted to a
68 county recorder's office for recording and that:
69 (a) (i) purports to create a lien[,] or encumbrance on or a notice of interest[, or
70 encumbrance on an owner's interest in certain] in real or personal property; and
71 (ii) at the time it is [recorded] submitted for recording is not:
72 [(a)] (A) expressly authorized by this chapter or another state or federal statute;
73 [(b)] (B) authorized by or contained in an order or judgment of a court of competent
74 jurisdiction in the state; or
75 [(c)] (C) signed by or expressly authorized [pursuant to] under a document signed by
76 the owner of the real or personal property[.];
77 (b) (i) purports to extinguish or release a lawful lien or encumbrance on or notice of
78 interest in real or personal property:
79 (ii) is submitted without authority from the holder of the lien, encumbrance, or notice
80 of interest; and
81 (iii) is submitted for recording before, as applicable, the obligation for which the lien
82 or encumbrance was given is satisfied or the interest is terminated; or
83 (c) (i) purports to reflect or establish a claim or obligation against a person; and
84 (ii) at the time it is submitted for recording is not:
85 (A) expressly authorized by state or federal law;
86 (B) authorized by or contained in an order or judgment of a court of competent
87 jurisdiction in the state; or
88 (C) signed by or expressly authorized under a document signed by the person.
89 Section 2. Section 38-9-2 is amended to read:

90 38-9-2. Scope.
91 [(1) (a) The provisions of Sections 38-9-1 , 38-9-3 , 38-9-4 , and 38-9-6 apply to any
92 recording or filing or any rejected recording or filing of a lien pursuant to this chapter on or
93 after May 5, 1997.]
94 [(b) The provisions of Sections 38-9-1 and 38-9-7 apply to all liens of record regardless
95 of the date the lien was recorded or filed.]
96 [(c)] (1) [Notwithstanding Subsections (1)(a) and (b), the provisions of this] This
97 chapter [applicable to the filing of a notice of interest do] does not apply to a notice of interest
98 filed before May 5, 2008.
99 (2) [The provisions of this chapter shall] This chapter does not prevent a person from
100 filing a lis pendens in accordance with Section 78B-6-1303 or seeking any other relief
101 permitted by law.
102 (3) This chapter does not apply to a person entitled to a preconstruction or construction
103 lien under Section 38-1a-301 who files a lien pursuant to Title 38, Chapter 1a, Preconstruction
104 and Construction Liens.
105 Section 3. Section 38-9-3 is amended to read:
106 38-9-3. Refusal to record wrongful document.
107 (1) (a) A county recorder may [reject recording of a lien] refuse to record a document if
108 the county recorder determines that the [lien] document is a wrongful [lien as defined in
109 Section 38-9-1 ] document.
110 [(b) If the county recorder rejects a document to record a lien in accordance with
111 Subsection (1)(a), the county recorder shall immediately return the original document together
112 with a notice that the document was rejected pursuant to this section to the person attempting
113 to record the document or to the address provided on the document.]
114 (b) A county recorder who refuses to record a document as provided in Subsection
115 (1)(a) shall immediately:
116 (i) return the original document to the person who submitted the document for
117 recording; and
118 (ii) provide written notice to the person who submitted the document for recording or
119 to the address provided on the document that the recorder refuses to record the document as
120 authorized under Subsection (1)(a).

121 (2) A county recorder who, within the scope of the county recorder's employment and
122 in good faith, [rejects or accepts] records or, as provided in this section, refuses to record a
123 document [for recording in good faith under this section] is not liable for damages resulting
124 from the recording or the refusal to record.
125 (3) If a [rejected] document that a county recorder refuses to record under this section
126 is later found not to be [recordable] a wrongful document pursuant to a court order[, it shall
127 have] and the document is subsequently recorded, the document has no retroactive recording
128 priority.
129 (4) Nothing in this chapter [shall preclude any] precludes a person from pursuing any
130 remedy pursuant to Utah Rules of Civil Procedure, Rule 65A, Injunctions.
131 Section 4. Section 38-9-4 is amended to read:
132 38-9-4. Civil liability for submitting wrongful document for recording --
133 Damages.
134 [(1) A lien claimant who records or causes a wrongful lien as defined in Section 38-9-1
135 to be recorded in the office of the county recorder against real property is liable to a record
136 interest holder for]
137 (1) A document sponsor of a wrongful document that is recorded is liable to an
138 affected person for:
139 (a) any actual damages proximately caused by the wrongful [lien.] document;
140 [(2) If the person in violation of Subsection (1) refuses to release or correct the
141 wrongful lien within 10 days from the date of written request from a record interest holder of
142 the real property delivered personally or mailed to the last-known address of the lien claimant,
143 the person is liable to that record interest holder for]
144 (b) $3,000 or [for] treble actual damages proximately caused by the wrongful
145 document, whichever is greater, and [for] reasonable attorney fees and costs[.], if the document
146 sponsor fails to release or correct the wrongful document within 10 days after the date of a
147 written request from the affected person, delivered personally to the document sponsor or
148 mailed to the last known address of the document sponsor; or
149 [(3) A person is liable to the record owner of real property for]
150 (c) $10,000 or [for] treble actual damages proximately caused by the wrongful
151 document, whichever is greater, and [for] reasonable attorney fees and costs, [who records or

152 causes to be recorded a wrongful lien as defined in Section 38-9-1 in the office of the county
153 recorder against the real property, knowing or having reason to] if:
154 (i) the document sponsor knows or reasonably should know that the document[: (a)]
155 submitted for recording is a wrongful [lien;] document; and
156 (ii) the document sponsor fails to release or correct the wrongful document within 10
157 days after the date of a written request from the affected person, delivered personally to the
158 document sponsor or mailed to the last known address of the document sponsor.
159 [(b) is groundless; or]
160 [(c) contains a material misstatement or false claim.]
161 (2) A person who is liable under Subsection (1) for a wrongful document is jointly and
162 severally liable with each other person who is liable for the wrongful document.
163 Section 5. Section 38-9-6 is amended to read:
164 38-9-6. Petition to file lien -- Notice to record interest holders -- Summary relief --
165 Contested petition.
166 (1) A [lien claimant whose] person who submits for recording a document [is rejected]
167 that a county recorder refuses to record pursuant to Section 38-9-3 may petition the district
168 court [in the county in which the document was rejected] for an expedited determination that
169 the [lien may] document is not a wrongful document and should be allowed to be recorded [or
170 filed].
171 (2) [(a) The] A petition under Subsection (1) shall:
172 (a) be filed:
173 (i) with the district court in the county of the county recorder who refused to record the
174 document; and
175 (ii) within 10 days [of] after the date the person who files the petition receives the
176 notice [is received of the rejection and shall] under Subsection 38-9-3 (1)(b)(ii) of the county
177 recorder's refusal to record the document;
178 (b) state with specificity the grounds why the document is not a wrongful document
179 and should [lawfully] be allowed to be recorded [or filed. (b) The petition shall]; and
180 (c) be supported by a sworn affidavit of the [lien claimant] person who submitted the
181 document for recording.
182 [(c)] (3) If the court finds the petition is insufficient, it may dismiss the petition without

183 a hearing.
184 [(d)] (4) (a) If the court grants a hearing, the petitioner shall, by certified or registered
185 mail, serve a copy of the petition, notice of hearing, and a copy of the court's order granting an
186 expedited hearing on all record interest holders of the property sufficiently in advance of the
187 hearing to enable any record interest holder to attend the hearing [and service shall be
188 accomplished by certified or registered mail].
189 [(e)] (b) Any record interest holder of the property has the right to attend and contest
190 the petition.
191 [(3)] (5) (a) [Following a hearing on the matter, if] If, following a hearing, the court
192 finds that the document [may lawfully be recorded, it] is not a wrongful document, the court
193 shall issue an order directing the county recorder to accept the document for recording.
194 (b) If the petition is contested, the court may award costs and reasonable [attorney's]
195 attorney fees to the prevailing party.
196 [(4)] (6) (a) A summary proceeding under this section [is]:
197 (i) may only [to] determine whether or not a contested document[, on its face, shall be
198 recorded by the county recorder. The proceeding] is a wrongful document; and
199 (ii) may not determine the truth of the content of the document [nor] or the property or
200 legal rights of the parties beyond the necessary determination of whether or not the document
201 [shall be recorded. The] is a wrongful document.
202 (b) A court's grant or denial of [the] a petition under this section may not restrict any
203 other legal remedies of any party, including any right to injunctive relief pursuant to Rules of
204 Civil Procedure, Rule 65A, Injunctions.
205 [(5)] (7) If [the] a petition under this section contains a claim for damages, the
206 [damage] proceedings related to the claim for damages may not be expedited under this
207 section.
208 Section 6. Section 38-9-7 is amended to read:
209 38-9-7. Petition to nullify wrongful document -- Notice -- Summary relief --
210 Finding of wrongful document -- Wrongful document is void.
211 (1) Any [record interest holder of real property against which a wrongful lien as
212 defined in Section 38-9-1 has been recorded] affected person may petition the district court in
213 the county in which the wrongful document [was] is recorded for summary relief to nullify the

214 [lien] wrongful document.
215 (2) [The] A petition under Subsection (1) shall state with specificity the claim [that the
216 lien is a] of the wrongful [lien] document and shall be supported by a sworn affidavit of the
217 [record interest holder] affected person.
218 (3) [(a)] If the court finds the petition insufficient, [it] the court may dismiss the
219 petition without a hearing.
220 [(b)] (4) (a) If the court finds the petition is sufficient, the court shall schedule a
221 hearing within 10 days to determine whether the document is a wrongful [lien] document.
222 [(c)] (b) The [record interest holder] affected person shall serve on the document
223 sponsor a copy of the petition [on the lien claimant] and a copy of a notice of the hearing
224 [pursuant to], as provided in Rules of Civil Procedure, Rule 4, Process.
225 [(d)] (c) The [lien claimant] document sponsor is entitled to attend and contest the
226 petition.
227 [(4)] (5) A summary proceeding under this section [is]:
228 (a) may only [to] determine whether or not a recorded document is a wrongful [lien.
229 The proceeding shall] document; and
230 (b) may not determine any other property or legal rights of the parties [nor] or restrict
231 other legal remedies of any party.
232 [(5)] (6) (a) [Following a hearing on the matter, if] If, following a hearing, the court
233 determines that the recorded document is a wrongful [lien] document, the court shall issue an
234 order declaring the [wrongful lien] document void ab initio, releasing the property from the
235 [lien] wrongful document, if applicable, and awarding costs and reasonable [attorney's]
236 attorney fees to the petitioner.
237 (b) (i) The [record interest holder may record] affected person may submit a certified
238 copy of the order [with] to the county recorder for recording.
239 (ii) [The] If the order releases real property from a wrongful document, the order shall
240 contain a legal description of the real property.
241 [(c) If] (7) (a) If, following a hearing, the court determines that the [claim of lien is
242 valid] recorded document claimed to be a wrongful document is not a wrongful document, the
243 court shall dismiss the petition and may award costs and reasonable [attorney's] attorney fees to
244 the [lien claimant] document sponsor. [The]

245 (b) If the dismissal order relates to a recorded document that purports to create,
246 extinguish, or release a lien or encumbrance on or a notice of interest in real property, the
247 dismissal order under Subsection (7)(a) shall contain a legal description of the real property.
248 [The]
249 (c) A prevailing [lien claimant] document sponsor may [record] submit a certified copy
250 of the dismissal order to the county recorder for recording.
251 [(6)] (8) If the district court determines that [the lien] a recorded document is a
252 wrongful [lien as defined in Section 38-9-1 ] document, the [wrongful lien] document is void ab
253 initio [and provides no notice of claim or interest].
254 [(7)] (9) If [the] a petition under this section contains a claim for damages, the
255 [damage] proceedings related to the claim for damages may not be expedited under this
256 section.




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