Tuesday, May 4, 2010

Utah Mechanics Lien "How To"

Utah lien law statutes provide broad mechanics’ lien rights to contractors, subcontractors, and all persons performing any services or furnishing or renting any materials or equipment, including licensed architects and engineers who have rendered professional services on a project. All persons who have a direct contract with a project owner are deemed to be “general contractors” and all others are deemed to be “subcontractors”. A Utah construction lien filed with regard to work performed on a privately owned property will attach to and encumber the fee simple ownership of the property.

Contractors as well as subcontractors, sub-subcontractors, and suppliers including architects and engineers may file a Utah mechanics lien.

All suppliers and subcontractors, regardless of the tier in which they fall, must file a “preliminary notice” of their involvement on the project to preserve their Utah mechanics lien rights. To fully protect their lien rights, suppliers and subcontractors must file a preliminary pre-lien notice within 20 days after commencement of the claimants work or the date of which it first furnishes materials or equipment or, 20 days after the filing of a notice of commencement.

Utah mechanics liens need to be filed within a certain period of time.  On construction projects for which no notice of completion is filed with the registry, a Utah notice of construction lien claim must be recorded no later than 180 days after the date of final completion of the “original contract”. In cases where the notice of completion is filed with the registry, the Utah mechanics lien notice must be filed no later than 90 days after the date of the notice of completion is filed but in no case later than 180 days from final completion. “Final completion” is defined by statute as follows:

the date on which a permanent certificate of occupancy is issued;

1) The date of final inspection by the governing public agency;

2) If no certificate of occupancy or final inspection is required by governmental entities, the date on which there remains no substantial work to be completed to finish; or

3) in situations where the original contractor is terminated prior to completion, and no certificate of occupancy or final inspection are issued, the last date on which substantial work was performed under the original contract.

To file a lien in Utah, you will need to show that you actually performed the work.  However, oral contracts are sufficient if you have sufficient documentation to show the existence of an agreement or that you performed the work for which you are liening.

Utah mechanics liens help you get paid because, on a private project, the mechanics’ lien places an encumbrance on the property that makes it difficult to resell or re-finance the property without first removing the lien.

Another way to ensure payment is to file a Stop Notice.  A Stop Notice is a notification that has the ability to enhance the effectiveness of a mechanic’s lien. A Stop Notice, or a notice to withhold funds, is sent to the company that is financing or funding the construction funds for a project. Once that company receives the Stop Notice, that company has notice that it should withhold sufficient money to satisfy the stop notice claim. The purpose of the Stop Notice is to provide the lender, financiers or funders of the construction project notice that there is money owed to a contractor, subcontractor or supplier so that an inquiry can be made as to why that money is not being paid.

Finally, if a payment bond has been posted on the project, filing a bond claim can be very effective in obtaining payment.  Bond claims can only be filed on a project where the owner, contractor or subcontractor has obtained a payment bond to ensure that every contractor receives payment for the work performed on the Project.  The payment bonds issued by sureties for construction projects have specific timing requirements, but most require claimants to submit claims against the bond within sixty to ninety days from the claimants’ last date of work.  Bond claims are as or more effective than a lien claim because the payment bond acts as a guarantee that payment will be made for work properly completed.

On Utah public projects, filing bond claims and stop notices are the most effective way to ensure that you will be paid for the work performed.

For more information on filing a Utah Construction Lien, a Utah Mechanics Lien, a Utah Stop Notice, a Utah Bond Claim, or a Utah pre-lien notice, please visit http://www.lienitnow.com/Utah-faq.asp.

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