Magazine article Business Credit

Lien Law Update: Utah Mechanic's Lien and Construction Bond

Magazine article Business Credit

Lien Law Update: Utah Mechanic's Lien and Construction Bond

Article excerpt

The Utah 2004 legislature passed and the governor signed several bills affecting mechanic's liens and construction bonds. all but one of the bills took affect May 3, 2004. A bill regarding an electronic filing registry provides for development of a system to be ready by May 2005, at which time the rules for its use will become effective. A short synopsis of the new laws follows. You can locate the full text of the bills on line at www.le.state.ut.us under Searchable Infobases and then selecting numbered or enrolled bills.

Construction Bonds-House Bills 20 and 219

House Bill 20 made technical corrections that make clear that those claiming on a bond must file the preliminary lien notice unless the claimant is in privity of contract with the payment bond principal, a person performing labor for wages, or unless no notice of commencement was filed.

House Bill 219 provides definitions for commercial and residential construction. Essentially residential is single family detached housing and attached housing up to and including fourplexes. Commercial construction is defined as "not residential construction." This bill then provides that payment bonds are required on any "original commercial contract exceeding $50,000.00...". An owner who fails to obtain the bond is personally liable.

Mechanic's liens-House Bills 32 and 182 and Senate Bill 111

House Bill 32 states liens must now be filed within 90 days of final completion of the original contract whether on residential or commercial jobs. "Final completion" is defined to be:

1) the date of issuance of permanent certificate of occupancy; or if none, then

) the date of the final inspection; or if none, then

3) the date on which there remains no substantial work to be completed.

The lien notice now must contain the dollar amount of the claim. An action to enforce the lien must be filed within 180 days of the date the lien was filed. This bill also includes some clarification of prior practices and technical changes.

House Bill 182 provides for yet another notice before filing a lien. A lien claimant is to provide 15 days prior written notice by "signature confirmation mail" to the person or entity that contracted with the lien claimant.The notice should state the amount due, who owes the money and, presumably, that the lien claimant intends to file a lien. This provision applies to liens filed on or after july 1, 2004. Curiously, failure to comply with the provision appears to carry no penalty. I'm sure that will change.

Senate Bill 111 provides that a subcontractor may request that the original (general) contractor provide a list of each preliminary notice received on the project. …

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