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The mechanics lien is one of the best tools you can wield to secure payment for the services that you provided in a construction project. Every state has different rules on how you can file a mechanics lien, and these rules must be followed to a tee for you to preserve your lien rights.
Filing a mechanics lien in Utah encumbers a property with a record of unsettled payments, which effectively limits the property’s chances of getting sold back to the market or getting refinanced for further improvements. This, in turn, can force property owners to settle outstanding payments to lien claimants.
This guide will inform you about the basic rules that you must follow when filing a mechanics lien in Utah. The mechanics lien – also known as construction lien in Utah – is a legal right that every construction professional must learn how to use, so read on to find out how you can properly exercise this right in Utah.
The first step in protecting your lien rights in Utah is to file a preliminary notice. Utah is one of the states in which filing a preliminary notice is required for ALL construction participants.
Whether you’re a contractor, subcontractor, material supplier, architect, or designer, you will have to file a preliminary notice for your potential mechanics lien to be considered valid.
Claimants looking to file a preconstruction lien are required to file a Utah Notice of Retention – also known as the Utah Notice of Preconstructive Services – while claimants looking to file a traditional mechanics lien must file a Utah Preliminary Notice.
A Utah Notice of Retention must be filed no later than 20 days after you start performing preconstructive services to a project.
A Utah Preliminary Notice, on the other hand, must be filed within 20 days after the Notice of Commencement has been filed or within 20 days after you start providing construction service in a project.
Make sure to file your notice early because missing the deadline could invalidate your mechanics lien.
All preliminary notices in Utah are filed in the State Construction Registry (SCR). This is a centralized registry that allows construction professionals to file and track their lien-related documents.
While the online registry helps you file the preliminary notice easier, you will still have to do legwork by gathering the required information. According to UTA 38-1a-501, these are the pieces of information that you need for your preliminary notice:
(i) the name, address, telephone number, and email address of the person providing the construction work for which the preliminary notice is filed;(ii) the name and address of the person who contracted with the claimant for the construction work;
(iii) the name of the owner or reputed owner;
(iv) the name of the original contractor for construction work under which the claimant is providing or will provide construction work;
(v) the address of the project property or a description of the location of the project;
(vi) the name of the county in which the project property is located; and
(vii)
(A) the tax parcel identification number of each parcel included in the project property;
(B) the entry number of a previously filed notice of construction loan under Section 38-1a-601 on the same project;
(C) the entry number of a previously filed preliminary notice on the same project that includes the tax parcel identification number of each parcel included in the project property; or
(D) the entry number of the building permit issued for the project.
The same pieces of information are required for either the Utah Notice of Retention and the Utah Preliminary Notice.
Make sure that the pieces of information you input in the registry are correct. Otherwise, your preliminary notice may be rendered null and void, which will in turn cause you to lose your lien rights.
Anyone who has performed work on a construction project may file a mechanics lien in Utah. Contractors, subcontractors, materials suppliers, equipment lessors, architects, designers, and engineers are all allowed to file a mechanics lien claim against a Utah property.
However, note that there are two types of Utah mechanics liens: the preconstruction lien and the traditional construction lien.
The key difference between the preconstruction lien and the traditional construction lien depends on when the work was performed.
The preconstruction lien in Utah applies to all types of services that are performed before actual construction begins, while the traditional construction lien – also officially known as the Mechanics Lien for Construction Services – applies to all work that is done during construction.
You must choose to file a Utah preconstruction lien if the tasks that you have done for a project qualify as “preconstructive services.” These tasks include the following:
A Utah mechanics lien must be filed for all claims that concern labor, materials, equipment, and other services that are furnished to the project during construction.
While the requirements for both preconstruction lien and traditional construction lien are pretty much the same, it is very important that you choose to record the correct type of lien. Recording the wrong lien may result in your claim to be nullified by the court.
If a payment deadline has passed and payment issues have come up, you are entitled to exercise your lien rights. Keep in mind that your right to file a mechanics lien is contingent on your filing of a preliminary notice, so do not ever skip the Step 1.
You must include the following details in your Utah mechanics lien form:
If you are filing a mechanics lien against an owner-occupied residence, your mechanics lien must include the following statement:
“X. PROTECTION AGAINST LIENS AND CIVIL ACTION. Notice is hereby provided in accordance with Section 38-11-108 of the Utah Code that under Utah law an “owner” may be protected against liens being maintained against an “owner-occupied residence” and from other civil action being maintained to recover monies owed for “qualified services” performed or provided by suppliers and subcontractors as a part of this contract, if either section (1) or (2) is met:
(1)(a) the owner entered into a written contract with an original contractor, a factory built housing retailer, or a real estate developer;
(b) the original contractor was properly licensed or exempt from licensure under Title 58, Chapter 55, Utah Construction Trades Licensing Act at the time the contract was executed; and
(c) the owner paid in full the contracting entity in accordance with the written contract and any written or oral amendments to the contract; or
(2) the amount of the general contract between the owner and the original contractor totals no more than $5,000.”
(3) An owner who can establish compliance with either section (1) or (2) may perfect the owner’s protection by applying for a Certificate of Compliance with the Division of Occupational and Professional Licensing. The application is available at www.dopl.utah.gov/rlrf.
Note that the statement above must be in substantially the same format and it must appear prominently in your Utah mechanics lien form. Failing to include such statements may nullify your lien claim.
Yes, a Utah mechanics lien must be notarized and must come with an acknowledgement document or a notarial certification upon filing. If your mechanics lien is Utah is not notarized, it is not entitled to be recorded in the office of the county recorder.
There are two important dates to keep in mind in filing your Utah mechanics lien, and your deadline depends on whichever is the earlier of the two. The two possible deadlines are as follows:
Note that the 90-day window starts when the Notice of Completion is filed in the SCR, and if you are registered as a participant in a certain project, you will receive a notification that this completion notice has been filed.
You must file your Utah mechanics lien in the recorder’s office in the county where the project is located.
The amount that you may claim with a mechanics lien is limited to what is referred to as the “reasonable value” for the construction services that you rendered in the project. This means that the cost you will claim must be limited to construction-related amounts, be it for labor, materials or rentals.
Also note that the amount stated in the original contract may be a good benchmark for determining the claimable amount, but this is not necessarily accurate. Changes and additional billable tasks may have occurred during the project. Use your best judgment to ensure that you are claiming a reasonable amount.
After recording the mechanics lien, you must serve a copy of it on the property owner or the reputed owner by certified mail. No other method is valid.
A copy of the mechanics lien must be served on the owner within 30 days after filing the document in the county clerk’s office.
You may use the last known mailing address of the owner as stated in the last completed real property assessment rolls of the county where the project is located.
Your mechanics lien may still be enforced but you will not be allowed to claim attorney fees and other costs.
If you don’t get paid in full, you must enforce your mechanics lien before it expires by initiating a foreclosure lawsuit. This must be done within 180 days after recording the mechanics lien in the district court in the county where the project is located.
On top of initiating a foreclosure lawsuit against a property, you are also required by Utah state laws to record a Notice of Pendency of Action, or lis pendens, against a property.
The lis pendens must be filed within 180 days after filing the mechanics lien. This notice attaches your lawsuit to the property, which warns interested parties such as potential buyers about your pending foreclosure action.
You may also choose to serve the property owner a Notice of Intent to Foreclose before initiating a lawsuit. While this is step is not a statutory requirement, doing so may be enough to persuade the property owner to settle the outstanding payments.
If you get paid in full at some point in the lien process, you must cancel your lien by recording a Cancellation of Construction Lien in the office of the clerk in the county where the project is in. You will typically receive a request from the property owner to have the lien cancelled, and you must cancel the lien within 10 days after receipt of this request.
Failing to cancel the lien on time may lead the court to require you to pay damages to the property owner.
The amount that can be claimed with a mechanics lien is limited to the construction-related services that you provided in the project. Attorney fees, lien costs, and other additional expenses must not be included in the claimed amount.
Not sending a copy of the lien to the owner does not mean you lose your lien rights, but this also does not mean that you should skip this step altogether. Filing the mechanics lien costs money and resources, and you want to be able to recover the fees that you incurred by ensuring that you follow this step.
Utah is fairly strict in enforcing the deadlines regarding mechanics liens. Make sure that the preliminary notice is filed in the SCR as soon as possible. Enforcing or cancelling the mechanics lien must also be done within the deadline window, otherwise the lien will expire or you will have to pay back the damages to the property owner.
Payment issues often crop up in the construction industry, and the mechanics lien is one of the most powerful remedies for this problem.
When you protect and exercise your lien rights, you are not only securing the payment that you have rightfully earned, but you are also taking advantage of a legal right that is exclusive to the construction sector.
