- Utah is an UNPAID BALANCE lien state
- Remote contractors have lien (private) and bond (public) rights in Utah.
- The Utah State Construction Registry (SCR) provides subcontractors and suppliers with a simple and standardized way to protect lien rights and insure payments for goods or services are received in a timely manner. By filing a preliminary notice through the SCR system, subcontractors and suppliers can alert property owners and general contractors to their involvement in a project and expectation of payment. The State Construction Registry provides participating subcontractors and suppliers with project visibility and will help general contractors oversee that payments trickle down to the appropriate parties. http://www.utah.gov/cnr/
- Residential projects can be exempted from mechanic's liens if the owner complies with certain requirements (Lien Recovery Fund). In its simplest terms, the Act protects homeowners from mechanic's liens and provides an alternate avenue of recovery for unpaid subcontractors and suppliers. The Lien Recovery Fund (the "Fund") exists to protect homeowners from having to pay twice for construction work on their homes. § 38-11-204.
- Preconstruction Services: Preconstruction services include "plan or design" services provided before construction of the improvement commences. Compensation must be separate and apart from construction services compensation.
- Preconstruction services are deemed completed when the construction commences (likely when the first preliminary notice is filed with the SCR).
- Providers of preconstruction services must file a notice of retention with the SCR within 20 days of beginning work.
Notice Speed Bumps
- A Notice of Commencement is required to be filed within the SCR by the governmental entity issuing the building permit within 15 days of commencement of physical work or the issuance of a building permit. This notice in essence registers the project in the SCR system. For the majority of projects, Notices of Commencement are automatically filed in the SCR based on permit data received from the issuing municipalities. If a Notice of Commencement is not filed the following Preliminary Notice requirement is voided and lien rights are automatically preserved.
- Preliminary Notice Requirements: All persons or entities (including general contractors) are required to file a Preliminary Notice, on registered projects, in order to preserve lien rights on private projects. Preliminary Notices are required to be filed within 20 days of commencement of the claimant's work.
- The date on which the first preliminary notice on a project is filed with the SCR is the date at which a lien takes effect, for priority purposes. Previously this date was established by the date the lien holder began work on the project. "Liens shall have priority over any lien, mortgage or other encumbrance that attached subsequent to that first preliminary notice," according to NACM's Manual of Credit and Commercial Laws.
- A late Preliminary Notice may be filed, but those filed after the initial 20 day time frame only become effective 5 days after which they are filed and preclude a subcontractor or supplier from filing a claim for compensation for labor, equipment, or materials furnished prior to the effective date of the preliminary notice.
- A construction lender can purchase a first priority position over any lien claimant if the claimant "(1) accepts payment in full from the lender for work performed before the lender's trust deed was recorded and (2) withdraws its preliminary notice." New preliminary notices can be re-filed after this occurs, in the instance that the filer's work on the project continues even after the construction lender has purchased their priority position from them by meeting the two requirements listed above.
- "Notice of Intention to File Notice of Completion": Applicable on privately owned, nonresidential projects where the total project time exceeds 120 days and the total cost of construction is greater than $500,000. The Notice of Intention to File Notice of Completion must be registered by the owner or prime within 45 days prior to registering a Notice of Completion. Subcontractors and suppliers are required to respond to the "Notice of Intention to File Notice of Completion" by amending their Preliminary Notice to include a good faith estimate of value (amount due). The good faith estimate is required to be registered within 20 days after filing of the Notice of Intention to File Notice of Completion. The SCR allows the option to flag the good faith estimate as "disputed". If the supplier or sub is still furnishing materials or labor, expects delays to include potential interest penalties, or has an ongoing dispute, checking the dispute box is important. The system allows the user to detail the dispute.
Mechanic's Lien Speed Bumps
- Statute requires that within 30 days after filing the Notice of Lien, the lien claimant deliver or mail by certified mail to either the reputed owner or record owner of the property a copy of the Notice of Lien.
- Upon completion of a construction project, a notice of completion may be filed through the Construction Registry. Once a notice of completion is filed, participating parties have only 10 days to file preliminary notices. As of May 1, 2006, if a valid Notice of Completion is filed through the SCR the window for filing a lien is 90 days. If a valid Notice of Completion is not filed the window for filing a lien is extended to 180 days. This applies to both residential and commercial construction projects.
- Preconstruction Services: Pre-Construction liens must be filed within 90 days after completing the services.
Oil & Gas Lien Speed Bumps
- Contractors, subcontractors and all persons performing work upon, or furnishing materials or equipment for, any production unit under contract with the owner, his agent or contractor must file a notice of lien within 180 days after the last day work was performed, or material or equipment was furnished, by the lien claimant.
- Preliminary notice to the owner or operator within 20 days of commencement of work is required for all subcontractors and material or equipment suppliers. To enforce the liens, the lien claimant shall institute an action within 180 days of the date of filing of the notice of lien, and shall, within 10 working days after commencement of the action, file a lis pendens with the County Recorder of each county in which the lien is recorded.
- Lien claimant's interest extends to the owner's production unit and access rights, pipelines, buildings, wells and oil tanks located on the property, as well as the ore, minerals, oil or gas substances in the ground or in storage.
- The owner of an interest in the production unit shall not be subject to a lien if he gives timely written notice in recordable form filed with the County Recorder of the county where the production unit is located stating that he will not be responsible for work performed or materials or equipment furnished.
Foreclosure Speed Bumps
- Final completion means: (1) the date of issuance of a permanent certificate of occupancy, if required; (2) the date of final inspection of work completed, if required and a certificate of occupancy is not required; or (3) the date on which there remains no substantial work to be completed to finish work on the original contract, if neither a certificate of occupancy nor a final inspection are required.
- Preconstruction Services: Lawsuit to foreclose preconstruction lien within 180 days of recordation of the preconstruction lien.
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