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First Substitute H.B. 105
Representative Michael T. Morley proposes the following substitute bill:
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CONSTRUCTION FILING AMENDMENTS
2
2005 GENERAL SESSION
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STATE OF UTAH
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Sponsor: Michael T. Morley
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LONG TITLE
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General Description:
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This bill makes changes to mechanics' liens.
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Highlighted Provisions:
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This bill:
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. addresses exemptions from preliminary notice requirements;
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. addresses final completion of an original contract;
13
. addresses certificates of compliance;
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. defines terms;
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. clarifies how the State Construction Registry is to be indexed;
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. requires the division to comply with Title 63, Chapter 38, Budgetary Procedures
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Act, when setting fees for the database;
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. provides that actions in connection with a filing to the database are not
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adjudications within the meaning of Title 63, Chapter 46b, Administrative
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Procedures Act;
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. clarifies that the division is not responsible for monitoring the timeliness of filings;
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. establishes provisions for addressing delinquency of payment of a filing fee for a
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filing to the database;
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. allows the division to make rules establishing the form of submission of an alternate
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filing;
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. provides that the archiving of a notice filed with the database may occur no earlier
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than the later of:
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. one year after the filing of a notice of completion;
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. two years after the last filing activity if no notice of completion is filed; or
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. one year after a filing is cancelled;
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. provides that data submitted to the database by a governmental entity is classified
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under Title 63, Chapter 2, Government Records Access and Management Act, by
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the division;
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. clarifies the required content of a notice of commencement filed for a project where
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no building permit is required;
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. provides that a person requesting a notice of filings for a project is responsible for
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the accuracy of an e-mail address, mailing address, or the telefax number to which
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notice is requested to be sent;
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. provides that a designated agent need only send the notice to the provided e-mail
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address, mailing address, or telefax number, whether or not the notice is actually
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received;
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. modifies the time within which a subcontractor or supplier must file a preliminary
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notice;
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. clarifies that a preliminary notice filed for one construction project applies to all
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labor, service, equipment, and material for that construction project;
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. provides that a qualified beneficiary may recover from the Residence Lien Recovery
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Fund only if the qualified beneficiary files an action within 180 days after a notice
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of claim is filed under Section 38-1-7; and
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. makes technical changes.
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Monies Appropriated in this Bill:
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None
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Other Special Clauses:
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This bill provides retrospective operation.
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Utah Code Sections Affected:
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AMENDS:
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14-1-20 (Superseded 05/01/05), as last amended by Chapter 30, Laws of Utah 2004
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14-2-5 (Superseded 05/01/05), as last amended by Chapter 30, Laws of Utah 2004
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38-1-7 (Effective 05/01/05), as last amended by Chapters 85 and 250, Laws of Utah
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2004
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38-1-11, as last amended by Chapters 42, 85 and 188, Laws of Utah 2004
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38-1-27 (Effective 05/01/05), as repealed and reenacted by Chapter 250, Laws of Utah
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2004
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38-1-30, as enacted by Chapter 250, Laws of Utah 2004
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38-1-31 (Effective 05/01/05), as enacted by Chapter 250, Laws of Utah 2004
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38-1-32 (Effective 05/01/05), as enacted by Chapter 250, Laws of Utah 2004
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38-1-33 (Effective 05/01/05), as enacted by Chapter 250, Laws of Utah 2004
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38-1-37 (Effective 05/01/05), as enacted by Chapter 250, Laws of Utah 2004
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38-11-204, as last amended by Chapter 42, Laws of Utah 2004
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63-56-38.1 (Superseded 05/01/05), as last amended by Chapter 30, Laws of Utah 2004
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
14-1-20 (Superseded 05/01/05)
is amended to read:
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14-1-20 (Superseded 05/01/05). Preliminary notice requirement.
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(1) Any person furnishing labor, service, equipment, or material for which a payment
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bond claim may be made under this chapter shall provide preliminary notice to the payment
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bond principal as prescribed by Section
38-1-27
, except that this section does not apply:
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(a) to a person who is in privity of contract with the payment bond principal;
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(b) to a person who contracts directly with the payment bond principal;
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[(b)] (c) to a person performing labor for wages; or
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[(c)] (d) if a notice of commencement is not filed as prescribed in Section
38-1-27
for
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the project or improvement for which labor, service, equipment, or material is furnished.
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(2) Any person who fails to provide the preliminary notice required by Subsection (1)
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may not make a payment bond claim under this chapter.
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(3) The preliminary notice required by Subsection (1) must be provided prior to
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commencement of any action on the payment bond.
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Section 2.
Section
14-2-5 (Superseded 05/01/05)
is amended to read:
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14-2-5 (Superseded 05/01/05). Preliminary notice requirement.
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(1) Any person furnishing labor, service, equipment, or material for which a payment
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bond claim may be made under this chapter shall provide preliminary notice to the payment
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bond principal as prescribed by Section
38-1-27
, except that this section does not apply:
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(a) to a person who is in privity of contract with the payment bond principal;
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(b) to a person who contracts directly with the payment bond principal;
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[(b)] (c) to a person performing labor for wages; or
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[(c)] (d) if a notice of commencement is not filed as prescribed in Section
38-1-27
for
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the project or improvement for which labor, service, equipment, or material is furnished.
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(2) Any person who fails to provide the preliminary notice required by Subsection (1)
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may not make a payment bond claim under this chapter.
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(3) The preliminary notice required by Subsection (1) must be provided prior to
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commencement of any action on the payment bond.
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Section 3.
Section
38-1-7 (Effective 05/01/05)
is amended to read:
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38-1-7 (Effective 05/01/05). Notice of claim -- Contents -- Recording -- Service on
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owner of property.
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(1) (a) Except as modified in Section
38-1-27
, a person claiming benefits under this
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chapter shall file for record with the county recorder of the county in which the property, or
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some part of the property, is situated, a written notice to hold and claim a lien within 90 days
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from the date of final completion of the original contract under which the claimant claims a
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lien under this chapter. For purposes of this Subsection (1), final completion of the original
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contract means:
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(i) if as a result of work performed under the original contract a permanent certificate
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of occupancy is required for such work, the date of issuance of a permanent certificate of
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occupancy by the local government entity having jurisdiction over the construction project;
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(ii) if no certificate of occupancy is required by the local government entity having
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jurisdiction over the construction project, but as a result of the work performed under the
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original contract an inspection is required for such work, the date of the final inspection for
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such work by the local government entity having jurisdiction over the construction project; or
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(iii) if with regard to work performed under the original contract no certificate of
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occupancy and no final inspection are required by the local government entity having
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jurisdiction over the construction project, the date on which there remains no substantial work
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to be completed to finish such work on the original contract.
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(b) Notwithstanding Section
38-1-2
, where a subcontractor performs substantial work
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after the applicable dates established by Subsections (1)(a)(i) and (ii), that subcontractor's
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subcontract shall be considered an original contract for the sole purpose of determining:
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(i) the subcontractor's time frame to file a notice of intent to hold and claim a lien
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under Subsection (1); and
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(ii) the original contractor's time frame to file a notice of intent to hold and claim a lien
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under Subsection (1) for that subcontractor's work.
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(c) For purposes of this section, the term "substantial work" does not include:
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(i) repair work; or
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(ii) warranty work[; or].
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[(iii) work for which the project owner is not holding payment to ensure completion of
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that work.]
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(d) Notwithstanding Subsection (1)(a)(iii), final completion of the original contract
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does not occur if work remains to be completed for which the owner is holding payment to
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ensure completion of that work.
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(2) (a) The notice required by Subsection (1) shall contain a statement setting forth:
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(i) the name of the reputed owner if known or, if not known, the name of the record
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owner;
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(ii) the name of the person:
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(A) by whom the lien claimant was employed; or
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(B) to whom the lien claimant furnished the equipment or material;
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(iii) the time when:
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(A) the first and last labor or service was performed; or
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(B) the first and last equipment or material was furnished;
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(iv) a description of the property, sufficient for identification;
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(v) the name, current address, and current phone number of the lien claimant;
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(vi) the amount of the lien claim;
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(vii) the signature of the lien claimant or the lien claimant's authorized agent;
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(viii) an acknowledgment or certificate as required under Title 57, Chapter 3,
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Recording of Documents; and
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(ix) if the lien is on an owner-occupied residence, as defined in Section
38-11-102
, a
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statement describing what steps an owner, as defined in Section
38-11-102
, may take to require
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a lien claimant to remove the lien in accordance with Section
38-11-107
.
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(b) Substantial compliance with the requirements of this Subsection (2) is sufficient to
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hold and claim a lien.
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(3) (a) Within 30 days after filing the notice of lien, the lien claimant shall deliver or
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mail by certified mail a copy of the notice of lien to:
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(i) the reputed owner of the real property; or
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(ii) the record owner of the real property.
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(b) If the record owner's current address is not readily available to the lien claimant, the
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copy of the claim may be mailed to the last-known address of the record owner, using the
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names and addresses appearing on the last completed real property assessment rolls of the
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county where the affected property is located.
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(c) Failure to deliver or mail the notice of lien to the reputed owner or record owner
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precludes the lien claimant from an award of costs and attorneys' fees against the reputed
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owner or record owner in an action to enforce the lien.
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(4) The Division of Occupational and Professional Licensing shall make rules
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governing the form of the statement required under Subsection (2)(a)(ix).
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Section 4.
Section
38-1-11
is amended to read:
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38-1-11. Enforcement -- Time for -- Lis pendens -- Action for debt not affected --
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Instructions and form affidavit and motion.
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(1) A lien claimant shall file an action to enforce the lien filed under this chapter within
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180 days from the day on which the lien claimant filed a notice of claim under Section
38-1-7
.
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(2) (a) Within the time period provided for filing in Subsection (1) the lien claimant
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shall file for record with the county recorder of each county in which the lien is recorded a
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notice of the pendency of the action, in the manner provided in actions affecting the title or
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right to possession of real property, or the lien shall be void, except as to persons who have
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been made parties to the action and persons having actual knowledge of the commencement of
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the action.
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(b) The burden of proof shall be upon the lien claimant and those claiming under the
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lien claimant to show actual knowledge.
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(3) This section may not be interpreted to impair or affect the right of any person to
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whom a debt may be due for any work done or materials furnished to maintain a personal
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action to recover the same.
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(4) (a) If a lien claimant files an action to enforce a lien filed under this chapter
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involving a residence, as defined in Section
38-11-102
, the lien claimant shall include with the
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service of the complaint on the owner of the residence:
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(i) instructions to the owner of the residence relating to the owner's rights under Title
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38, Chapter 11, Residence Lien Restriction and Lien Recovery Fund Act; and
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(ii) a form affidavit to enable the owner of the residence to specify the grounds upon
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which the owner may exercise available rights under Title 38, Chapter 11, Residence Lien
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Restriction and Lien Recovery Fund Act.
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(b) The instructions and form affidavit required by Subsection (4)(a) shall meet the
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requirements established by rule by the Division of Occupational and Professional Licensing in
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accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act.
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(c) If a lien claimant fails to provide to the owner of the residence the instructions and
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form affidavit required by Subsection (4)(a), the lien claimant shall be barred from maintaining
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or enforcing the lien upon the residence.
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(d) Judicial determination of the rights and liabilities of the owner of the residence
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under Title 38, Chapters 1 and 11, and Title 14, Chapter 2, shall be stayed until after the owner
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has been given a reasonable period of time to establish compliance with Subsections
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38-11-204
(4)(a) and (4)(b) through an informal proceeding, as set forth in Title 63, Chapter
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46b, Administrative Procedures Act, commenced within 30 days of the owner being served
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summons in the foreclosure action, at the Division of Occupational and Professional Licensing
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and obtain a certificate of compliance or denial of certificate of compliance, as defined in
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Section
38-11-102
.
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(e) An owner applying for a certificate of compliance under Subsection (4)(d) shall
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send by certified mail to all lien claimants;
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(i) a copy of the application for a certificate of compliance; and
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(ii) all materials filed in connection with the application.
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(f) The Division of Occupational and Professional Licensing shall notify all lien
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claimants listed in an owner's application for a certificate of compliance under Subsection
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(4)(e) of the issuance or denial of a certificate of compliance.
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(5) The written notice requirement applies to liens filed on or after July 1, 2004.
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Section 5.
Section
38-1-27 (Effective 05/01/05)
is amended to read:
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38-1-27 (Effective 05/01/05). State Construction Registry -- Form and contents of
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notice of commencement, preliminary notice, and notice of completion.
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(1) As used in this section and Sections
38-1-30
through
38-1-37
:
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(a) "Alternate filing" means a filing made in a manner established by the division under
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Subsection (2)(e) other than an electronic filing.
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(b) "Cancel" means to indicate that a filing is no longer given effect.
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(c) "Construction project," "project," or "improvement" means:
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(i) a specific project or improvement for which one building permit is issued; or
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(ii) if no building permit is required, the improvement or work required by a contract
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between the owner and an original contractor under Section
38-1-2
.
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[(a)] (d) "Database" means the State Construction [Notice] Registry [Database] created
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in this section.
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[(b)] (e) (i) "Designated agent" means the third party the Division of Occupational and
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Professional Licensing contracts with to create and maintain the State Construction [Notice]
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Registry [Database].
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(ii) The designated agent is not an agency, instrumentality, or a political subdivision of
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the state.
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[(c)] (f) "Division" means the Division of Occupational and Professional Licensing.
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(g) "Interested person" means a person who may be affected by a construction project.
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[(d)] (h) "Program" means the State Construction [Notice] Registry [Database]
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Program created in this section.
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(2) Subject to receiving adequate funding through a legislative appropriation and
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contracting with an approved third party vendor who meets the requirements of Sections
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38-1-30
through
38-1-37
, there is created the State Construction [Notice] Registry [Database]
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Program [which] that shall:
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(a) (i) assist in protecting public health, safety, and welfare; and
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(ii) promote a fair working environment;
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(b) be overseen by the division with the assistance of the designated agent;
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(c) provide a central repository for notices of commencement, preliminary notices, and
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notices of completion filed in connection with all privately owned construction projects as well
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as all state and local government owned construction projects throughout Utah;
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(d) be accessible for filing and review [of] by way of the program Internet website of:
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(i) notices of commencement[,];
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(ii) preliminary notices[,]; and
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(iii) notices of completion [via the program Internet website];
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(e) accommodate:
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(i) electronic filing of [such notices as well as provide for] the notices described in
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Subsection (2)(d); and
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(ii) alternate filing of the notices described in Subsection (2)(d) by U.S. mail, telefax,
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[telephone,] or any other alternate method as provided by rule made by the division in
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accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act;
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(f) (i) provide electronic notification for up to three e-mail addresses for each interested
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person or company who requests notice from the construction notice registry [as well as]; and
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(ii) provide alternate means of notification for [those persons] a person who [make]
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makes an alternate [filings] filing, including U.S. mail, telefax, or any other method as
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prescribed by rule made by the division in accordance with Title 63, Chapter 46a, Utah
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Administrative Rulemaking Act; and
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(g) provide hard-copy printing of electronic receipts for an individual [filings] filing
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evidencing the date and time of the individual [filings as well as] filing and the content of the
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individual [filings] filing.
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(3) (a) [Persons interested in a construction project] An interested person may request
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notice of filings related to [the] a project.
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(b) The database shall be indexed by:
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(i) owner name[,];
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(ii) original contractor name[,];
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(iii) subdivision, development, or other project name, if any;
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(iv) project address[,];
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(v) lot or parcel number[,];
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(vi) unique project number[,] assigned by the designated agent; and
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(vii) any other identifier that the division considers reasonably appropriate [and
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established by rule, made in accordance with Title 63, Chapter 46a, Utah Administrative
276
Rulemaking Act] in collaboration with the designated agent.
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(4) (a) In accordance with [Title 63, Chapter 46a, Utah Administrative Rulemaking
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Act,] the process required by Section
63-38-3.2
, the division shall establish [by rule] the
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[filing] fees for [notices]:
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(i) a notice of commencement[,];
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(ii) a preliminary [notices, notices] notice;
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(iii) a notice of completion[, and requests];
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(iv) a request for notice[, which fees may not exceed the amount reasonably necessary
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to create and maintain the database.];
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(v) providing a required notice by an alternate method of delivery;
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(vi) a duplicate receipt of a filing; and
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(vii) account setup for a person who wishes to be billed periodically for filings with the
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database.
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(b) The fees allowed under Subsection (4)(a) may not exceed the amount reasonably
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necessary to create and maintain the database.
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[(b)] (c) The fees established by the division may vary by method of filing if one form
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of filing is more costly than [other forms] another form of filing.
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(d) Notwithstanding Subsection
63-38-3.2
(2)(c), the division need not submit the fee
294
schedule for fees allowed by this Subsection (4) to the Legislature until the 2006 General
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Session.
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(e) The division may provide by contract that the designated agent may retain all fees
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collected by the designated agent except that the designated agent shall remit to the division the
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cost of the division's oversight under Subsection (2)(b).
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(5) The following are not an adjudicative proceeding under Title 63, Chapter 46b,
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Administrative Procedures Act:
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(a) the filing of a notice permitted by this chapter;
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(b) the rejection of a filing permitted by this chapter; or
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(c) other action by the designated agent in connection with a filing of any notice
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permitted by this chapter.
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(6) The division and the designated agent need not determine the timeliness of any
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notice before filing the notice in the database.
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(7) (a) A person who is delinquent on the payment of a fee established under
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Subsection (4) may not file a notice with the database.
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(b) A determination that a person is delinquent on the payment of a fee for filing
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established under Subsection (4) shall be made in accordance with Title 63, Chapter 46b,
311
Administrative Procedures Act.
312
(c) Any order issued in a proceeding described in Subsection (7)(b) may prescribe the
313
method of that person's payment of fees for filing notices with the database after issuance of the
314
order.
315
Section 6.
Section
38-1-30
is amended to read:
316
38-1-30. Third party contract -- Designated agent.
317
(1) The division shall contract in accordance with Title 63, Chapter 56, Utah
318
Procurement Code, with a third party to establish and maintain the database for the purposes
319
established under this section, Section
38-1-27
, and Sections
38-1-31
through
38-1-37
.
320
(2) (a) The third party under contract under this section is the division's designated
321
agent, and shall develop and maintain a database from the information provided by:
322
(i) local government entities issuing building permits;
323
(ii) original contractors;
324
(iii) subcontractors; and
325
(iv) other interested persons.
326
(b) The division and the designated agent shall design, develop, and test the database
327
for full implementation on May 1, 2005.
328
(3) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
329
division shall make rules and develop procedures for:
330
(a) the division to oversee and enforce this section, Section
38-1-27
, and Sections
331
38-1-31
through
38-1-37
; [and]
332
(b) the designated agent to administer this section, Section
38-1-27
, and Sections
333
38-1-31
through
38-1-37
[.]; and
334
(c) the form of submission of an alternate filing.
335
(4) (a) The designated agent shall archive computer data files at least semiannually for
336
auditing purposes.
337
(b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
338
division shall make rules to allow the designated agent[, unless requested otherwise by an
339
interested party for a particular project,] to periodically archive [and purge completed or
340
inactive] projects from the database[:].
341
(c) A project shall be archived no earlier than:
342
(i) [no earlier than] one year after the day on which a notice of [commencement]
343
completion is filed for a [particular] project; [or]
344
(ii) if no notice of [commencement] completion is filed, [no earlier than] two years
345
after the last filing activity for a [particular] project[.]; or
346
(iii) one year after the day on which a filing is cancelled under Subsection
347
38-1-32
(3)(c) or
38-1-33
(2)(c).
348
[(c)] (d) The division may audit the designated agent's administration of the database as
349
often as the division considers necessary.
350
(5) The designated agent shall carry errors and omissions insurance in the amounts
351
established by rule made by the division in accordance with Title 63, Chapter 46a, Utah
352
Administrative Rulemaking Act.
353
Section 7.
Section
38-1-31 (Effective 05/01/05)
is amended to read:
354
38-1-31 (Effective 05/01/05). Building permit -- Construction -- Notice registry --
355
Notice of commencement of work.
356
(1) (a) (i) For a construction project where a building permit is issued, within 15 days
357
after the issuance of the building permit, the local government entity issuing that building
358
permit shall input the [data] building permit application and transmit the building permit
359
information to the database electronically [via] by way of the Internet or computer modem or
360
by any other means and such information shall form the basis of a notice of commencement.
361
(ii) For the purposes of classifying a record under Title 63, Chapter 2, Government
362
Records Access and Management Act, building permit information transmitted from a local
363
governmental entity to the database shall be classified in the database by the division
364
notwithstanding the local governmental entity's classification of the building permit
365
information.
366
(b) For a construction project where a building permit is not issued, within 15 days
367
after commencement of physical construction work at the project site, the original contractor
368
shall file a notice of commencement with the database.
369
(c) An owner of construction, a lender, surety, or other interested [party] person may
370
file a notice of commencement with the designated agent within the [prescribed] time [set forth
371
in Subsection] prescribed by Subsections (1)(a) and (b).
372
(d) If duplicate notices of commencement are filed, they shall be combined into one
373
notice for each project. The designated agent shall assign each construction project a unique
374
project number [which] that:
375
(i) identifies each construction project; and
376
(ii) can be associated with all notices of commencement, preliminary notices, and
377
notices of completion.
378
(e) (i) A notice of commencement is effective as to all [work, materials, and
379
equipment] labor, service, equipment, and material furnished to the construction project after
380
the filing of the notice of commencement.
381
(ii) A notice of commencement is effective only as to the [work, materials, or
382
equipment] labor, service, equipment, and material furnished to the construction project that is
383
provided subsequent to the filing of the notice of commencement.
384
(2) (a) The content of a notice of commencement shall include the following [if
385
available on a building permit]:
386
[(a)] (i) the name and address of the owner of the project [or improvement];
387
[(b)] (ii) the name and address of the:
388
[(i)] (A) original contractor; and
389
[(ii)] (B) surety providing any payment bond for the project [or improvement], or if
390
none exists, a statement that a payment bond was not required for the work being performed;
391
[(c) (i)] (iii) (A) the project address if the project can be reasonably identified by an
392
address; or
393
[(ii)] (B) the name and general description of the location of the project if the project
394
cannot be reasonably identified by an address;
395
[(d)] (iv) a general description of the project; and
396
[(e)] (v) the lot or parcel number, and any subdivision, development, or other project
397
name, of the real property upon which the project is to be constructed if the project is subject to
398
mechanics' liens[; and].
399
[(f) a legal description of the property on which the project is located if the project is
400
subject to mechanics' liens.]
401
(b) The content of a notice of commencement need not include all of the items listed in
402
Subsection (2)(a) if:
403
(i) a building permit is issued for the project; and
404
(ii) all items listed in Subsection (2)(a) that are available on the building permit are
405
included in the notice of commencement.
406
(3) [Failure to file any] If a notice of commencement for a construction project
407
[suspends the operation of] is not filed within 15 days after the day on which a building permit
408
is issued, the following do not apply:
409
(a) [the preliminary notice provisions of] Section
38-1-32
; and
410
(b) [the notice of completion provisions of] Section
38-1-33
.
411
(4) (a) [Electronic] Unless a person indicates to the division or designated agent that
412
the person does not wish to receive a notice under this section, electronic notice of the filing of
413
a notice of commencement or alternate notice as prescribed in Subsection (1), shall be provided
414
to:
415
[(a)] (i) all persons who have filed notices of commencement for the project; and
416
[(b)] (ii) all interested [parties] persons who have requested such notice for the project.
417
(b) (i) A person to whom notice is required under Subsection (4)(a) is responsible for:
418
(A) providing an e-mail address, mailing address, or telefax number to which a notice
419
required by Subsection (4)(a) is to be sent; and
420
(B) the accuracy of any e-mail address, mailing address, or telefax number to which
421
notice is to be sent.
422
(ii) The designated agent fulfills the notice requirement of Subsection (4)(a) when it
423
sends the notice to the e-mail address, mailing address, or telefax number provided to the
424
designated agent whether or not the notice is actually received.
425
(5) The burden is upon any person seeking to enforce the notice of commencement to
426
prove that the notice of commencement is filed timely and meets all of the requirements in this
427
section.
428
(6) At the time a building permit is obtained, each original contractor shall
429
conspicuously post at the project site a copy of [each] the building permit obtained for the
430
project [improvement].
431
Section 8.
Section
38-1-32 (Effective 05/01/05)
is amended to read:
432
38-1-32 (Effective 05/01/05). Preliminary notice -- Subcontractor or supplier.
433
(1) (a) (i) A subcontractor or supplier shall file a preliminary notice with the database
434
within the later of:
435
(A) [Within] 20 days after commencement of its own work or the commencement of
436
furnishing [materials or equipment] labor, service, equipment, and material to a construction
437
project[, a subcontractor or supplier shall file a preliminary notice with the construction notice
438
registry.]; or
439
(B) 20 days after the filing of a notice of commencement.
440
(ii) A preliminary notice filed within the [20-day] period described in Subsection
441
(1)(a)(i) is effective as to all [work, materials, and equipment] labor, service, equipment, and
442
material furnished to the construction project, including labor, service, equipment, and material
443
provided to more than one contractor or subcontractor.
444
(b) If a subcontractor or supplier files a preliminary notice after the [20-day] period
445
prescribed by Subsection (1)(a), the preliminary notice becomes effective [as of] five days after
446
the [filing of the] day on which the preliminary notice is filed.
447
(c) Failure to file a preliminary notice within the [20-day] period required by
448
Subsection (1)(a) precludes a subcontractor or supplier from filing any claim for compensation
449
earned for performance of [work] labor or service or supply of materials or equipment
450
furnished to the construction project before the expiration of five days after the late filing of a
451
preliminary notice, except as against the person with whom the subcontractor or supplier
452
contracted.
453
(d) (i) The preliminary notice must be filed before a notice of lien may be filed with the
454
county recorder pursuant to Section
38-1-7
.
455
(ii) The content of a preliminary notice shall include the following:
456
[(i)] (A) the name, address, and telephone number of the person furnishing the labor,
457
service, equipment, or material;
458
[(ii)] (B) the name and address of the person who contracted with the claimant for the
459
furnishing of the labor, service, equipment, or material;
460
[(iii)] (C) the name of the record or reputed owner of the project [or improvement];
461
[(iv)] (D) the name of the original contractor under which the claimant is performing or
462
will perform its work; and
463
[(v)] (E) the address of the project [or improvement] or a description of the location of
464
the project [or improvement].
465
(2) (a) (i) [Electronic] Unless a person indicates to the division or designated agent that
466
the person does not wish to receive a notice under this section, electronic notification of the
467
filing of a preliminary notice or alternate notice as prescribed in Subsection (1), shall be
468
provided to:
469
[(i)] (A) the person filing the preliminary notice;
470
[(ii)] (B) each person that filed a notice of commencement for the project; and
471
[(iii)] (C) all interested [parties] persons who have requested such notice for the
472
project.
473
(ii) A person to whom notice is required under Subsection (2)(a)(i) is responsible for:
474
(A) providing an e-mail address, mailing address, or telefax number to which a notice
475
required by Subsection (2)(a) is to be sent; and
476
(B) the accuracy of any e-mail address, mailing address, or telefax number to which
477
notice is to be sent.
478
(iii) The designated agent fulfills the notice requirement of Subsection (2)(a)(i) when it
479
sends the notice to the e-mail address, mailing address, or telefax number provided to the
480
designated agent whether or not the notice is actually received.
481
(b) The burden is upon the person filing the preliminary notice to prove that the
482
preliminary notice is filed timely and substantially meets all of the requirements of this section.
483
(c) Subject to Subsection (1)(d), a person required by this section to give preliminary
484
notice is only required to give one notice for each project [or improvement, which may include
485
an entire structure or a scheme of improvements].
486
(d) If the labor, service, equipment, or material is furnished pursuant to contracts under
487
more than one original contract, the notice requirements must be met with respect to the labor,
488
service, equipment, or [materials] material furnished under each original contract.
489
(3) (a) If a construction project owner, original contractor, subcontractor, or other
490
interested person believes that a preliminary notice has been filed erroneously, that owner,
491
original contractor, subcontractor, or other interested person can request from the person who
492
filed the preliminary notice evidence establishing the validity of the preliminary notice.
493
(b) Within ten days after the request described in Subsection (3)(a), the person or entity
494
that filed the preliminary notice shall provide the requesting person or entity proof that the
495
preliminary notice is valid.
496
(c) If the person or entity that filed the preliminary notice [cannot] does not provide
497
proof of the validity of the preliminary notice, that person or entity shall immediately [remove]
498
cancel the preliminary notice from the database in any manner prescribed by the division
499
pursuant to rule.
500
Section 9.
Section
38-1-33 (Effective 05/01/05)
is amended to read:
501
38-1-33 (Effective 05/01/05). Notice of completion.
502
(1) (a) (i) Upon final completion of a construction project, an owner of a construction
503
project, an original contractor, a lender that has provided financing for the construction project,
504
or surety that has provided bonding for the construction project, may file a notice of completion
505
with the database.
506
(ii) Final completion, for purposes of this Subsection (1), shall mean:
507
[(i)] (A) if as a result of work performed under the original contract a permanent
508
certificate of occupancy is required for such work, the date of issuance of a permanent
509
certificate of occupancy by the local government entity having jurisdiction over the
510
construction project;
511
[(ii)] (B) if no certificate of occupancy is required by the local government entity
512
having jurisdiction over the construction project, but as a result of the work performed under
513
the original contract an inspection is required for such work, the date of the final inspection for
514
such work by the local government entity having jurisdiction over the construction project; or
515
[(iii)] (C) if with regard to the work performed under the original contract no certificate
516
of occupancy and no final inspection are required by the local government entity having
517
jurisdiction over the construction project, the date on which there remains no substantial work
518
to be completed to finish such work on the original contract.
519
(b) Notwithstanding Section
38-1-2
, where a subcontractor performs substantial work
520
after the applicable dates established by Subsections (1)(a)(i) and (ii), that subcontractor's
521
subcontract shall be considered an original contract for the sole purpose of determining:
522
(i) the subcontractor's time frame to file a notice to hold and claim a lien under
523
Subsection
38-1-7
(1); and
524
(ii) the original contractor's time frame to file a notice to hold and claim a lien under
525
Subsection
38-1-7
(1) for that subcontractor's work.
526
(c) For purposes of this section, the term "substantial work" does not include:
527
(i) repair work; or
528
(ii) warranty work[; or].
529
[(iii) work for which the project owner is not holding payment to ensure completion of
530
that work.]
531
(d) Notwithstanding Subsection (1)(a)(ii)(C), final completion of the original contract
532
does not occur if work remains to be completed for which the owner is holding payment to
533
ensure completion of the work.
534
[(d)] (e) (i) [Electronic] Unless a person indicates to the division or designated agent
535
that the person does not wish to receive a notice under this section, electronic notification of
536
the filing of a notice of completion or alternate notice as prescribed in Subsection (1)(a), shall
537
be provided to:
538
(A) each person that filed a notice of commencement for the project;
539
(B) each person that filed preliminary notice for the project; and
540
(C) all interested [parties] persons who have requested notice for the project.
541
(ii) A person to whom notice is required under Subsection (1)(d) is responsible for:
542
(A) providing an e-mail address, mailing address, or telefax number to which a notice
543
required by Subsection (4)(a) is to be sent; and
544
(B) the accuracy of any e-mail address, mailing address, or telefax number to which
545
notice is to be sent.
546
(iii) The designated agent fulfills the notice requirement of Subsection (1)(d)(ii) when
547
it sends the notice to the e-mail address, mailing address, or telefax number provided to the
548
designated agent, whether or not the notice is actually received.
549
[(ii)] (iv) Upon the filing of a notice of completion, the time periods for filing
550
preliminary notices stated in Section
38-1-27
are modified such that all preliminary notices
551
shall be filed subsequent to the notice of completion and [shall be filed] within ten days from
552
the day on which the notice of completion is filed.
553
[(e)] (f) A subcontract that is considered an original contract for purposes of this
554
section shall not create a requirement for an additional preliminary notice if a preliminary
555
notice has already been given for [materials and] the labor, service, equipment, and material
556
furnished to the subcontractor who performs substantial work.
557
(2) (a) If a construction project owner, original contractor, subcontractor, or other
558
interested person believes that a notice of completion has been filed erroneously, that owner,
559
original contractor, subcontractor, or other interested person can request from the person who
560
filed the preliminary notice evidence establishing the validity of the notice of completion.
561
(b) Within ten days after the request described in Subsection (2)(a), the person that
562
filed the notice of completion shall provide the requesting person proof that the notice of
563
completion is valid.
564
(c) If the person that filed the notice of completion [cannot] does not provide proof of
565
the validity of the notice of completion, that person shall immediately [remove] cancel the
566
notice of completion from the database in any manner prescribed by the division pursuant to
567
rule.
568
Section 10.
Section
38-1-37 (Effective 05/01/05)
is amended to read:
569
38-1-37 (Effective 05/01/05). Application of Section 38-1-27 and Sections 38-1-30
570
through 38-1-36.
571
(1) Except as provided in Subsection (3), Section
38-1-27
and Sections
38-1-30
572
through
38-1-36
in effect as of May 1, 2005 shall apply to construction projects [commenced]
573
for which a notice of commencement is filed on or after May 1, 2005.
574
(2) A construction project [commenced] for which a notice of commencement is filed
575
before May 1, 2005 is subject to the provisions of this chapter in effect prior to May 1, 2005.
576
(3) (a) Section
38-1-27
and Sections
38-1-30
through
38-1-36
in effect as of May 1,
577
2005, shall apply to a construction project for which a notice of commencement is filed on or
578
after November 1, 2005 involving a residence, as defined in Subsection
38-11-102
(22).
579
(b) For a construction project for which a notice of commencement is filed before
580
November 1, 2005 involving a residence, as defined in Subsection
38-11-102
(22), the law in
581
effect on April 30, 2005 shall govern.
582
Section 11.
Section
38-11-204
is amended to read:
583
38-11-204. Claims against the fund -- Requirement to make a claim --
584
Qualifications to receive compensation -- Qualifications to receive a certificate of
585
compliance.
586
(1) To claim recovery from the fund a person shall:
587
(a) meet the requirements of either Subsection (4) or (7);
588
(b) pay an application fee determined by the division under Section
63-38-3.2
; and
589
(c) file with the division a completed application on a form provided by the division
590
accompanied by supporting documents establishing:
591
(i) that the person meets the requirements of either Subsection (4) or (7);
592
(ii) that the person was a qualified beneficiary or laborer during the construction on the
593
owner-occupied residence; and
594
(iii) the basis for the claim.
595
(2) To recover from the fund, the application required by Subsection (1) shall be filed
596
no later than one year:
597
(a) from the date the judgment required by Subsection (4)(d) is entered;
598
(b) from the date the nonpaying party filed bankruptcy, if the claimant is precluded
599
from obtaining a judgment or from satisfying the requirements of Subsection (4)(d) because the
600
nonpaying party filed bankruptcy within one year after the entry of judgment; or
601
(c) from the date the laborer, trying to recover from the fund, completed the laborer's
602
qualified services.
603
(3) To obtain a certificate of compliance an owner or agent of the owner shall establish
604
with the division that the owner meets the requirements of Subsections (4)(a) and (4)(b).
605
(4) To recover from the fund, regardless of whether the residence is occupied by the
606
owner, a subsequent owner, or the owner or subsequent owner's tenant or lessee, a qualified
607
beneficiary shall establish that:
608
(a) (i) the owner of the owner-occupied residence or the owner's agent entered into a
609
written contract with an original contractor licensed or exempt from licensure under Title 58,
610
Chapter 55, Utah Construction Trades Licensing Act:
611
(A) for the performance of qualified services;
612
(B) to obtain the performance of qualified services by others; or
613
(C) for the supervision of the performance by others of qualified services in
614
construction on that residence;
615
(ii) the owner of the owner-occupied residence or the owner's agent entered into a
616
written contract with a real estate developer for the purchase of an owner-occupied residence;
617
or
618
(iii) the owner of the owner-occupied residence or the owner's agent entered into a
619
written contract with a factory built housing retailer for the purchase of an owner-occupied
620
residence;
621
(b) the owner has paid in full the original contractor, licensed or exempt from licensure
622
under Title 58, Chapter 55, Utah Construction Trades Licensing Act, real estate developer, or
623
factory built housing retailer under Subsection (4)(a) with whom the owner has a written
624
contract in accordance with the written contract and any amendments to the contract;
625
(c) (i) the original contractor, licensed or exempt from licensure under Title 58,
626
Chapter 55, Utah Construction Trades Licensing Act, the real estate developer, or the factory
627
built housing retailer subsequently failed to pay a qualified beneficiary who is entitled to
628
payment under an agreement with that original contractor or real estate developer licensed or
629
exempt from licensure under Title 58, Chapter 55, Utah Construction Trades Licensing Act, for
630
services performed or materials supplied by the qualified beneficiary;
631
(ii) a subcontractor who contracts with the original contractor, licensed or exempt from
632
licensure under Title 58, Chapter 55, Utah Construction Trades Licensing Act, the real estate
633
developer, or the factory built housing retailer failed to pay a qualified beneficiary who is
634
entitled to payment under an agreement with that subcontractor or supplier; or
635
(iii) a subcontractor who contracts with a subcontractor or supplier failed to pay a
636
qualified beneficiary who is entitled to payment under an agreement with that subcontractor or
637
supplier;
638
(d) (i) the qualified beneficiary filed:
639
(A) an action against the nonpaying party to recover monies owed to the qualified
640
beneficiary within 180 days from the date the qualified beneficiary [last provided qualified
641
services] filed a notice of claim under Section
38-1-7
, unless precluded from doing so by the
642
nonpaying party's bankruptcy filing within the 180 days [after completion of services] from the
643
date the qualified beneficiary filed the notice of claim; and
644
(B) a notice of commencement of action with the division within 30 days from the date
645
the qualified beneficiary filed the civil action if a civil action was filed as required by
646
Subsection (4)(d)(i)(A);
647
(ii) the qualified beneficiary has obtained a judgment against the nonpaying party who
648
failed to pay the qualified beneficiary under an agreement to provide qualified services for
649
construction of that owner-occupied residence;
650
(iii) (A) the qualified beneficiary has:
651
(I) obtained from a court of competent jurisdiction the issuance of an order requiring
652
the judgment debtor, or if a corporation any officer of the corporation, to appear before the
653
court at a specified time and place to answer concerning the debtor's or corporation's property;
654
(II) received return of service of the order from a person qualified to serve documents
655
under the Utah Rules of Civil Procedure, Rule 4(b); and
656
(III) made reasonable efforts to obtain asset information from the supplemental
657
proceedings; and
658
(B) if assets subject to execution are discovered as a result of the order required under
659
Subsection (4)(d)(iii)(A) or for any other reason, to obtain the issuance of a writ of execution
660
from a court of competent jurisdiction; or
661
(iv) the qualified beneficiary timely filed a proof of claim where permitted in the
662
bankruptcy action, if the nonpaying party has filed bankruptcy;
663
(e) the qualified beneficiary is not entitled to reimbursement from any other person;
664
and
665
(f) the qualified beneficiary provided qualified services to a contractor, licensed or
666
exempt from licensure under Title 58, Chapter 55, Utah Construction Trades Licensing Act.
667
(5) The requirements of Subsections (4)(d)(i), (ii), and (iii) need not be met if the
668
qualified beneficiary has been precluded from obtaining a judgment against the nonpaying
669
party or from satisfying the requirements of Subsections (4)(d)(i), (ii), and (iii) because the
670
nonpaying party filed bankruptcy.
671
(6) If a qualified beneficiary fails to file the notice with the division required under
672
Subsection (4)(d)(i)(B), the claim of the qualified beneficiary shall be paid:
673
(a) if otherwise qualified under this chapter;
674
(b) to the extent that the limit of Subsection
38-11-203
(4)(a) has not been reached by
675
payments from the fund to qualified beneficiaries who have complied with the notice
676
requirements of Subsection (4)(d)(i)(B); and
677
(c) in the order that the claims are filed by persons who fail to comply with Subsection
678
(4)(d)(i)(B), not to exceed the limit of Subsection
38-11-203
(4)(a).
679
(7) To recover from the fund a laborer shall:
680
(a) establish that the laborer has not been paid wages due for the work performed at the
681
site of a construction on an owner-occupied residence; and
682
(b) provide any supporting documents or information required by rule by the division.
683
(8) A fee determined by the division under Section
63-38-3.2
shall be deducted from
684
any recovery from the fund received by a laborer.
685
(9) The requirements of Subsections (4)(a) and (4)(b) may be satisfied if an owner or
686
agent of the owner establishes to the satisfaction of the director that the owner of the
687
owner-occupied residence or the owner's agent entered into a written contract with an original
688
contractor who:
689
(a) was a business entity that was not licensed under Title 58, Chapter 55, Utah
690
Construction Trades Licensing Act, but was solely or partly owned by an individual who was
691
licensed under Title 58, Chapter 55, Utah Construction Trades Licensing Act; or
692
(b) was a natural person who was not licensed under Title 58, Chapter 55, Utah
693
Construction Trades Licensing Act, but who was the sole or partial owner and qualifier of a
694
business entity that was licensed under Title 58, Chapter 55, Utah Construction Trades
695
Licensing Act.
696
(10) The director shall have equitable power to determine if the requirements of
697
Subsections (4)(a) and (4)(b) have been met, but any decision by the director under [Title 38,
698
Chapter 11,] this chapter shall not alter or have any effect on any other decision by the division
699
under Title 58, Occupations and Professions.
700
Section 12.
Section
63-56-38.1 (Superseded 05/01/05)
is amended to read:
701
63-56-38.1 (Superseded 05/01/05). Preliminary notice requirement.
702
(1) Any person furnishing labor, service, equipment, or material for which a payment
703
bond claim may be made under this chapter shall provide preliminary notice to the payment
704
bond principal as prescribed by Section
38-1-27
, except that this section does not apply:
705
(a) to a person who is in privity of contract with the payment bond principal;
706
(b) to a person who contracts directly with the payment bond principal;
707
[(b)] (c) to a person performing labor for wages; or
708
[(c)] (d) if a notice of commencement is not filed as prescribed in Section
38-1-27
for
709
the project or improvement for which labor, service, equipment, or material is furnished.
710
(2) Any person who fails to provide the preliminary notice required by Subsection (1)
711
may not make a payment bond claim under this chapter.
712
(3) The preliminary notice required by Subsection (1) must be provided prior to
713
commencement of any action on the payment bond.
714
Section 13. Retrospective operation.
715
(1) The amendments to Section
38-1-37
(Effective 05/01/05) have retrospective
716
operation to May 1, 2005.
717
(2) The amendments to Sections
14-1-20
(Superseded 05/01/05),
14-2-5
(Superseded
718
05/01/05), and
63-56-38.1
(Superseded 05/01/05) have retrospective operation to April 30,
719
2005.
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