A construction lien—sometimes called a mechanic’s lien—is automatically created when a worker, contractor, subcontractor, supplier, or other entity in Utah provides work, services, or improvements on or for a specific piece of real property. (For simplicity in this post, we’ll refer to this as “construction work.”) A lien attaches to the property itself—specifically, the owner’s interest in the property. The amount of the lien is the reasonable value of the construction work, which value is usually determined by a contract, such as a contract between an owner and the general contractor or between a subcontractor and a supplier. If the lien claimant does not receive this value, the lien claimant has the right to sell the property in order to obtain the reasonable value of the construction work (assuming, of course, that the lien is not extinguished before such a sale).
All the lien claimant has to do to create a lien is provide some type of construction work on the property. Nothing else is required. However, this lien is quickly lost for good—in a matter of days even—if the lien claimant does not file what is called a “preliminary notice”. In this post, I discuss the basics of a preliminary notice in Utah and the consequences of failing to file a preliminary notice. I then briefly outline the other requirements needed to preserve and enforce a lien.
What is a Preliminary Notice?
A preliminary notice is a filing made with the Utah State Construction Registry that must include certain information regarding the work performed (or to be performed) on a certain piece of real property. This required information includes:
- The contact information of the person providing the construction work (i.e. the lien claimant)
- The contact information of the person who contracted with this lien claimant for the construction work on the project
- The name of the owner of the property
- The name of the original contractor under which the lien claimant has provided or will provide construction work (the original contractor is usually the general contractor who works with the owner and supervises all the subcontractors on the project)
- An address or description of the property location
- The county where the project property is located
- Other information to properly identify the project property
A preliminary notice must substantially comply with these requirements, and the safest way to do so is by linking the preliminary notice, within the Utah State Construction Registry, to the preliminary notice filed by the general contractor on the project.
When Must a Preliminary Notice be Filed?
The short answer is “as soon as possible.” Although the lien exists and is created right when a person provides construction work, under Utah law, a person loses the right to assert a lien if he or she does not file a preliminary notice with the Utah State Construction Registry within twenty (20) days of beginning work on the project. It is a one-time task. Once the preliminary notice is filed, it is good for all work performed on the specific project. Because a preliminary notice only costs a few dollars, it is a good idea to file it on each project.
What Happens if a Preliminary Notice is Filed Late?
If a person who provides construction work on a project fails to file a preliminary notice within twenty (20) days of beginning a project, all is not lost, but the lien claim may be severely reduced. The claim is only valid for work completed more than five days after the preliminary notice is filed. For example, if a person begins work on January 1 but fails to file a preliminary notice until January 25, the lien is only valid for construction work performed after January 30.
Also, a person only has 10 days to file a preliminary notice once a notice of completion is filed.
What Are the Consequences of Not Filing a Preliminary Notice?
Stated simply, a person who fails to file a preliminary notice loses its lien claim. If the person attempts to assert the lien claim after failing to file a preliminary notice, there is a good argument that the person has filed a wrongful lien and is in danger of pretty hefty penalties under Utah law.
What Must a Person Do After Filing a Preliminary Notice?
Filing a preliminary notice is the first in several steps to preserve and enforce a lien claim. Other necessary steps include doing the following:
- Recording a notice of construction lien with the county recorder’s office within statutory timelines
- Initiating a legal action to enforce the construction lien, which must usually be done within 180 days of recording the notice of construction lien
- Recording a lis pendens with the country recorder’s office, which gives notice of the legal action to enforce the lien
- Winning the legal action and obtaining an order from a court to sell the property to satisfy the amounts owing under the construction lien claim
Need Help with Preliminary Notice and Lien Issues?
The above post explains only a single step in the construction lien claim and enforcement process. Entering and succeeding in the realm of construction lien claims can be extremely challenging, and consulting with an attorney may be beneficial. If you have any questions regarding preliminary notices and other issues with respect to construction lien claims, I am happy to help. I offer a free consultation. My direct dial is 801-365-1021, and you can e-mail me at [email protected].