Senator Todd Weiler proposes the following substitute bill:


1     
NOTICE OF PENDENCY OF ACTION AMENDMENTS

2     
2016 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Todd Weiler

5     
House Sponsor: V. Lowry Snow

6     

7     LONG TITLE
8     General Description:
9          This bill modifies provisions relating to the filing of a notice of pendency of action
10     against real property.
11     Highlighted Provisions:
12          This bill:
13          ▸     adds additional filing requirements;
14          ▸     affirmatively prohibits filing a notice of pendency of action until the underlying
15     action has been filed;
16          ▸     adds additional standards for release of the notice when the underlying action is for
17     specific performance;
18          ▸     revises requirements relating to the contents of the notice;
19          ▸     adds specific civil liability and damage provisions when a notice of pendency is
20     improperly filed; and
21          ▸     makes technical corrections.
22     Money Appropriated in this Bill:
23          None
24     Other Special Clauses:
25          None
26     Utah Code Sections Affected:
27     AMENDS:
28          78B-6-1303, as enacted by Laws of Utah 2008, Chapter 3
29          78B-6-1304, as enacted by Laws of Utah 2008, Chapter 3
30     ENACTS:
31          78B-6-1304.5, Utah Code Annotated 1953
32     

33     Be it enacted by the Legislature of the state of Utah:
34          Section 1. Section 78B-6-1303 is amended to read:
35          78B-6-1303. Lis pendens -- Notice.
36          (1) [Either] (a) Any party to an action [affecting] filed in the United States District
37     Court for the District of Utah, the United States Bankruptcy Court for the District of Utah, or a
38     Utah district court that affects the title to, or the right of possession of, real property may file a
39     notice of [the] pendency of [the] action [with the county recorder in the county where the
40     property or any portion of the property is located].
41          (b) A party that chooses to file a notice of pendency of action shall:
42          (i) first, file the notice with the court that has jurisdiction of the action; and
43          (ii) second, record a copy of the notice filed with the court with the county recorder in
44     the county where the property or any portion of the property is located.
45          (c) A person may not file a notice of pendency of action unless a case has been filed
46     and is pending in a United States or Utah district court.
47          (2) The notice shall contain:
48          (a) the caption of the case, with the names of the parties and the case number;
49          (b) the object of the action or defense; and
50          (c) [a] the specific legal description of only the property affected [in that county].
51          (3) From the time of filing the notice, a purchaser [or], an encumbrancer of the
52     property [who], or any other party in interest that may be affected by the action is considered to
53     have constructive notice of [the] pendency of [the] action.
54          Section 2. Section 78B-6-1304 is amended to read:
55          78B-6-1304. Motions related to a notice of pendency of an action.
56          (1) Any time after a notice has been [recorded] filed pursuant to Section 78B-6-1303,
57     any of the following may make a motion to the court in which the action is pending to release
58     the notice:
59          (a) a party to the action; or
60          (b) a person with an interest in the real property affected by the notice, including a
61     prospective purchaser with an executed purchase contract.
62          (2) A court shall order [a] notice of pendency of action released if:
63          (a) the court receives a motion to release under Subsection (1); and
64          (b) after a notice and hearing if determined to be necessary by the court, the court finds
65     that the claimant has not established by a preponderance of the evidence the [probable] validity
66     of the real property claim that is the subject of the notice.
67          (3) In deciding a motion under Subsection (2), if the underlying action for which a
68     notice of pendency of action is filed is an action for specific performance, a court shall order a
69     notice released if:
70          (a) the court finds that the party filing the action has failed to satisfy the statute of
71     frauds for the transaction under which the claim is asserted relating to the real property; or
72          (b) the court finds that the elements necessary to require specific performance have not
73     been established by a preponderance of the evidence.
74          [(3)] (4) If a court releases a claimant's notice pursuant to this section, [the] that
75     claimant may not record another notice with respect to the same property without [approval of]
76     an order from the court in which the action is pending that authorizes the recording of a new
77     notice of pendency.
78          [(4)] (5) Upon a motion by any person with an interest in the real property that is the
79     subject of a notice of pendency, a court may, at anytime after the notice has been recorded,
80     require, as a condition of maintaining the notice, that the claimant [to give] provide security to
81     the moving party [a guarantee as a condition of maintaining the notice: (a) any time after a
82     notice has been recorded; and (b)] in the amount and form directed by the court, regardless of
83     whether the court has received an application to release under Subsection (1).
84          [(5)] (6) A person who receives [a guarantee] security under Subsection [(4)] (5) may
85     recover from the surety an amount not [to exceed] less than the amount of the [guarantee]
86     security upon a showing that:
87          (a) the claimant did not prevail on the real property claim; and
88          (b) the person [seeking the guarantee] receiving the security suffered damages as a
89     result of the maintenance of the notice.
90          (7) The amount of security required by the court under Subsection (5) does not
91     establish or limit the amount of damages or reasonable attorney fees and costs that may be
92     awarded to a party who is found to have been damaged by a wrongfully filed notice of
93     pendency.
94          [(6)] (8) A court shall award costs and attorney fees to a prevailing party on any motion
95     under this section unless the court finds that:
96          (a) the nonprevailing party acted with substantial justification; or
97          (b) other circumstances make the imposition of attorney fees and costs unjust.
98          Section 3. Section 78B-6-1304.5 is enacted to read:
99          78B-6-1304.5. Civil liability for recording wrongful notice of pendency --
100     Damages.
101          A person is liable to the record owner of real property, or to a person with a leasehold
102     interest in the real property that is damaged by the maintenance of a notice of pendency, for
103     $10,000 or for treble actual damages, whichever is greater, and for reasonable attorney fees and
104     costs, if the person records or causes to be recorded a notice of pendency against the real
105     property, knowing or having reason to know that:
106          (1) legal action against the property has not been filed as required by Section
107     78B-6-1303;
108          (2) the notice is groundless;
109          (3) the notice fails to comply with the notice requirements of Subsection
110     78B-6-1303(2); or
111          (4) the notice contains an intentional material misstatement or false claim.