Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 119 Second Substitute (2022GS)

Sponsor

Sen. Sandall, S.

Final action

Governor Signed 3/24/2022

Outcome

Became law — signed by Gov. Spencer J. Cox

Summary

What it does

• This bill:
• modifies definitions related to preconstruction and constructions liens, including definitions of the terms "owner" and "project property";
• modifies and clarifies when preconstruction and construction liens attach to certain property interests; and
• makes technical changes.

Every vote on this bill

Bill text

PRECONSTRUCTION AND CONSTRUCTION LIENS
AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Scott D. Sandall
House Sponsor: 
Steve Eliason
LONG TITLE
General Description:
This bill modifies provisions related to preconstruction and construction liens. 
Highlighted Provisions:
This bill:
▸ modifies definitions related to preconstruction and constructions liens, including
definitions of the terms "owner" and "project property";
▸ modifies and clarifies when preconstruction and construction liens attach to certain
property interests; and
▸ makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
38-1a-102
, as last amended by Laws of Utah 2019, Chapter 250
38-1a-301
, as renumbered and amended by Laws of Utah 2012, Chapter 278
38-1a-506
, as renumbered and amended by Laws of Utah 2012, Chapter 278
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
38-1a-102
 is amended to read:
38-1a-102.
Definitions.
As used in this chapter:
(1) "Alternate means" means a method of filing a legible and complete notice or other
document with the registry other than electronically, as established by the division by rule.
(2) "Anticipated improvement" means [
the
] 
an
 improvement:
(a) for which preconstruction service is performed; and
(b) that is anticipated to follow the performing of preconstruction service.
(3) "Applicable county recorder" means the office of the recorder of each county in
which any part of the property on which a claimant claims or intends to claim a preconstruction
or construction lien is located.
(4) "Bona fide loan" means a loan to an owner or owner-builder by a lender in which
the owner or owner-builder has no financial or beneficial interest greater than 5% of the voting
shares or other ownership interest.
(5) "Claimant" means a person entitled to claim a preconstruction or construction lien.
(6) "Compensation" means the payment of money for a service rendered or an expense
incurred, whether based on:
(a) time and expense, lump sum, stipulated sum, percentage of cost, cost plus fixed or
percentage fee, or commission; or
(b) a combination of the bases listed in Subsection (6)(a).
(7) "Construction lender" means a person who makes a construction loan.
(8) "Construction lien" means a lien under this chapter for construction work.
(9) "Construction loan" does not include a consumer loan secured by the equity in [
the
]
a
 consumer's home.
(10) "Construction project" means an improvement that is constructed pursuant to an
original contract.
(11) "Construction work":
(a) means labor, service, material, or equipment provided for the purpose and during
the process of constructing, altering, or repairing an improvement; and
(b) includes scheduling, estimating, staking, supervising, managing, materials testing,
inspection, observation, and quality control or assurance involved in constructing, altering, or
repairing an improvement.
(12) "Contestable notice" means a notice of preconstruction service under Section
38-1a-401
, a preliminary notice under Section 
38-1a-501
, or a notice of completion under
Section 
38-1a-506
.
(13) "Contesting person" means an owner, original contractor, subcontractor, or other
interested person.
(14) "Designated agent" means the third party the division contracts with as provided
in Section 
38-1a-202
 to create and maintain the registry.
(15) "Division" means the Division of Occupational and Professional Licensing created
in Section 
58-1-103
.
(16) "Entry number" means the reference number that:
(a) the designated agent assigns to each notice or other document filed with the
registry; and
(b) is unique for each notice or other document.
(17) "Final completion" means:
(a) the date of issuance of a permanent certificate of occupancy by the local
government entity having jurisdiction over [
the
] 
a
 construction project, if a permanent
certificate of occupancy is required;
(b) the date of the final inspection of [
the
] construction work by the local government
entity having jurisdiction over [
the
] 
a
 construction project, if an inspection is required under a
state-adopted building code applicable to the construction work, but no certificate of occupancy
is required;
(c) unless the owner is holding payment to ensure completion of construction work, the
date on which there remains no substantial work to be completed to finish the construction
work under the original contract, if a certificate of occupancy is not required and a final
inspection is not required under an applicable state-adopted building code; or
(d) the last date on which substantial work was performed under the original contract,
if, because the original contract is terminated before completion of the construction work
defined by the original contract, the local government entity having jurisdiction over [
the
] 
a
construction project does not issue a certificate of occupancy or perform a final inspection.
(18) "Final lien waiver" means a form that complies with Subsection 
38-1a-802
(4)(c).
(19) "First preliminary notice filing" means a preliminary notice that:
(a) is the earliest preliminary notice filed on [
the
] 
a
 construction project for which the
preliminary notice is filed;
(b) is filed on a construction project that, at the time the preliminary notice is filed, has
not reached final completion; and
(c) is not [
cancelled
] 
canceled
 under Section 
38-1a-307
.
(20) "Government project-identifying information" has the same meaning as defined in
Section 
38-1b-102
.
(21) "Improvement" means:
(a) a building, infrastructure, utility, or other human-made structure or object
constructed on or for and affixed to real property; or
(b) a repair, modification, or alteration of a building, infrastructure, utility, or object
referred to in Subsection (21)(a).
(22) "Interested person" means a person that may be affected by a construction project.
(23) "Notice of commencement" means a notice required under Section 
38-1b-201
 for
a government project[
,
] as defined in Section 
38-1b-102
.
(24) "Original contract":
(a) means a contract between an owner and an original contractor for preconstruction
service or construction work; and
(b) does not include a contract between an owner-builder and another person.
(25) "Original contractor" means a person, including an owner-builder, that contracts
with an owner to provide preconstruction service or construction work.
(26) "Owner" means [
the person that owns the project property
] 
a person who
possesses an interest in a project property and contracts with an original contractor for
preconstruction service or construction work
.
(27) "Owner-builder" means an owner, including an owner who is also an original
contractor, who:
(a) contracts with one or more other persons for preconstruction service or construction
work for an improvement on the owner's real property; and
(b) obtains a building permit for the improvement.
(28) "Preconstruction lien" means a lien under this chapter for a preconstruction
service.
(29) "Preconstruction service":
(a) means to plan or design, or to assist in the planning or design of, an improvement or
a proposed improvement:
(i) before construction of the improvement commences; and
(ii) for compensation separate from any compensation paid or to be paid for
construction work for the improvement; and
(b) includes consulting, conducting a site investigation or assessment, programming,
preconstruction cost or quantity estimating, preconstruction scheduling, performing a
preconstruction construction feasibility review, procuring construction services, and preparing
a study, report, rendering, model, boundary or topographic survey, plat, map, design, plan,
drawing, specification, or contract document.
(30) "Private project" means a construction project that is not a government project.
(31) "Project property" means the real property 
interest
 on or for which preconstruction
service or construction work is or will be provided.
(32) "Registry" means the State Construction Registry under Part 2, State Construction
Registry.
(33) "Required notice" means:
(a) a notice of preconstruction service under Section 
38-1a-401
;
(b) a preliminary notice under Section 
38-1a-501
 or Section 
38-1b-202
;
(c) a notice of commencement;
(d) a notice of construction loan under Section 
38-1a-601
;
(e) a notice under Section 
38-1a-602
 concerning a construction loan default;
(f) a notice of intent to obtain final completion under Section 
38-1a-506
; or
(g) a notice of completion under Section 
38-1a-507
.
(34) "Subcontractor" means a person that contracts to provide preconstruction service
or construction work to:
(a) a person other than the owner; or
(b) the owner, if the owner is an owner-builder.
(35) "Substantial work" does not include repair work or warranty work.
(36) "Supervisory subcontractor" means a person that:
(a) is a subcontractor under contract to provide preconstruction service or construction
work; and
(b) contracts with one or more other subcontractors for the other subcontractor or
subcontractors to provide preconstruction service or construction work that the person is under
contract to provide.
Section 2. Section 
38-1a-301
 is amended to read:
38-1a-301.
Those entitled to lien -- What may be attached.
(1) Except as provided in Section 
38-11-107
, a person who provides preconstruction
service or construction work on or for a project property has a lien on the project property for
the reasonable value of the preconstruction service or construction work, respectively, as
provided in this chapter.
(2) A person may claim a preconstruction lien and a separate construction lien on the
same project property.
(3) (a) A construction lien may include an amount claimed for a preconstruction
service.
(b) A preconstruction lien may not include an amount claimed for construction work.
(4) 
(a)
 A preconstruction or construction lien attaches only to the interest that the
owner has in the project property that is the subject of the lien.
(b) If an owner possesses an interest in the project property that is less than fee simple,
a preconstruction or construction lien attaches only to the lesser interest of the owner and does
not attach to the fee simple interest.
(c) Notwithstanding Subsection (4)(b), a preconstruction or construction lien may
attach to the fee simple interest in the project property, if the person who provides
preconstruction service or construction work can demonstrate that the preconstruction service
or construction work:
(i) was authorized by the person possessing the fee simple interest in the project
property; and
(ii) provides a substantial benefit to the person who owns the fee simple interest
beyond the time period of the lesser interest possessed by the owner.
Section 3. Section 
38-1a-506
 is amended to read:
38-1a-506.
Notice of intent to obtain final completion.
(1) An owner[
, as defined in Section 
14-2-1
,
] of a nonresidential construction project
that is registered with the registry, or an original contractor of a commercial nonresidential
construction project that is registered with the registry under Section 
38-1a-501
, shall file with
the registry a notice of intent to obtain final completion as provided in this section if:
(a) the completion of performance time under the original contract for construction
work is greater than 120 days;
(b) the total original construction contract price exceeds $500,000; and
(c) the original contractor or owner has not obtained a payment bond in accordance
with Section 
14-2-1
.
(2) The notice of intent described in Subsection (1) shall be filed at least 45 days before
the day on which the owner or original contractor of a commercial nonresidential construction
project files or could have filed a notice of completion under Section 
38-1a-507
.
(3) A person who provides construction work to an owner or original contractor who
files a notice of intent in accordance with Subsection (1) shall file an amendment to the
person's preliminary notice previously filed by the person as required in Section 
38-1a-501
:
(a) that includes:
(i) a good faith estimate of the total amount remaining due to complete the contract,
purchase order, or agreement relating to the person's approved construction work;
(ii) the identification of each original contractor or subcontractor with whom the
person has a contract or contracts for providing construction work; and
(iii) a separate statement of all known amounts or categories of work in dispute; and
(b) no later than 20 days after the day on which the owner or 
original
 contractor files a
notice of intent.
(4) (a) A person described in Subsection (3) may demand a statement of adequate
assurance from the owner, 
original
 contractor, or subcontractor with whom the person has
privity of contract no later than 10 days after the day on which the person files a balance
statement in accordance with Subsection (3) from an owner, 
original
 contractor, or
subcontractor who is in privity of contract with the person.
(b) A demand for adequate assurance as described in Subsection (4)(a) may include a
request for a statement from the owner, 
original
 contractor, or subcontractor that the owner,
original
 contractor, or subcontractor has sufficient funds dedicated and available to pay for all
sums due to the person filing for the adequate assurances or that will become due in order to
complete a construction project.
(c) A person who demands adequate assurance under Subsection (4)(a) shall deliver
copies of the demand to the owner and 
original
 contractor:
(i) by hand delivery with a responsible party's acknowledgment of receipt;
(ii) by certified mail with a return receipt; or
(iii) as provided under Rule 4, Utah Rules of Civil Procedure.
(5) (a) A person described in Subsection (3) may bring a legal action against a party
with whom the person is in privity of contract, including a request for injunctive or declaratory
relief, to determine the adequacy of the funds of the owner, 
original
 contractor, or
subcontractor with whom the demanding person contracted if, after the person demands
adequate assurance in accordance with the requirements of this section:
(i) the owner, 
original
 contractor, or subcontractor fails to provide adequate assurance
that the owner, 
original
 contractor, or subcontractor has sufficient available funds, or access to
financing or other sufficient available funds, to pay for the completion of the demanding
person's approved work on the construction project; or
(ii) the parties disagree, in good faith, as to whether there are adequate funds, or access
to financing or other sufficient available funds, to pay for the completion of the demanding
person's approved work on the construction project.
(b) If a court finds that an owner, 
original
 contractor, or subcontractor has failed to
provide adequate assurance in accordance with Subsection (4)(a), the court may require the
owner, 
original
 contractor, or subcontractor to post adequate security with the court sufficient
to assure timely payment of the remaining contract balance for the approved work of the person
seeking adequate assurance, including:
(i) cash;
(ii) a bond;
(iii) an irrevocable letter of credit;
(iv) property;
(v) financing; or
(vi) another form of security approved by the court.
(6) (a) A person is subject to the civil penalty described in Subsection (6)(b), if the
person files a balance statement described in Subsection (3) that misrepresents the amount due
under the contract with the intent to:
(i) charge an owner, 
original
 contractor, or subcontractor more than the actual amount
due; or
(ii) procure any other unfair advantage or benefit on the person's behalf.
(b) The civil penalty described in Subsection (6)(a) is the greater of:
(i) twice the amount by which the balance statement filed under Subsection (3) exceeds
the amount actually remaining due under the contract for completion of construction; and
(ii) the actual damages incurred by the owner, 
original
 contractor, or subcontractor.
(7) A court shall award reasonable attorney fees to a prevailing party for an action
brought under this section.
(8) Failure to comply with the requirements established in this section does not affect
any other requirement or right under this chapter.
(9) A person who has not filed a preliminary notice as required under Section
38-1a-501
 is not entitled to a right or a remedy provided in this section.
(10) This section does not create a cause of action against a person with whom the
demanding party is not in privity of contract.