To preserve a lien claim, a lien claimant must, among other things, record a notice of construction lien with the county recorder’s office, and within 180 days thereafter, initiate a lawsuit to foreclose on that lien. But what happens if, within that 180-day period, the lien claimant files an amended notice of lien, perhaps because the lien claimant wants to claim a higher amount than originally claimed? If the second or amended lien claim would have been a valid notice of construction lien had it been filed on its own, does the 180-day timeframe reset? Almost certainly not. The 180-day timeline likely runs from the first and original notice of lien. This article explains why.
The 180-Day Timeframe to File a Lawsuit
A construction lien—sometimes called a mechanic’s lien—is automatically created whenever a worker, contractor, subcontractor, supplier, or other entity or individual in Utah provides work, services, or improvements on real property. A construction lien helps assure payment for the work done. Although such liens are automatically created, there are five basic steps that a construction lien claimant must follow to preserve and enforce a lien, and any misstep is likely fatal to those rights. Two of those steps include: 1) recording a notice of lien with the county recorder’s office and 2) within 180 days thereafter, initiating a lien foreclosure action in a Utah court. This deadline to file a lawsuit is very strict. If a lien claimant files and records just a day late, the lien right is almost certainly lost.
The Effect of Filing an Amended Notice of Lien in That 180-Day Timeframe
Sometimes, a lien claimant records an amended notice of lien, which may increase the value of the lien. When an amended notice of lien is filed, does this act reset the 180-day deadline to begin a lawsuit?
A Utah court addressed this issue in 2008 in Foothill Park, LC v Judston, Inc. In that case, a party performed certain land-development services on property and, as a result, became a lien claimant. If not paid, the lien claimant had the right to eventually foreclose on that lien, so long as it followed correct procedures. The lien claimant properly recorded a notice of lien—and two additional notices. The first was recorded, an amended notice of lien was recorded about a year and a half later, and another third notice was recorded about a year and a half after the second amended notice. Each of these independent notices would have been individually timely since they were all recorded during the completion of the original contract, and a notice of lien needed to be recorded within 180 days from the completion of the original contract. (Based on current laws and the facts at hand, this deadline may be different, as explained here.)
However, the court determined that, although the lien claimant properly filed the first notice of lien, it lost its lien rights when it did not file a lawsuit to enforce its lien rights within 180 days of that first notice. The court also explained that, even if the second notice of lien had reset the 180-day timeline, that timeline also expired before a lawsuit was filed. The court explained that the “inchoate lien right perished,” which is a fancy way of saying that the lien claimant lost its rights before those rights were fully formed and developed. Quoting a Massachusetts case, the court further explained that there can be but one lien and that the filing of a second notice of lien concerning the same materials neither extends the statutory period nor revives the original lien (the act of recording a notice of lien is not the creation of a lien but rather an act that preserves a lien right). Thus, after the lien right had expired, the lien claimants third notice of lien did nothing more than seek to perfect a lien right that had been void and unenforceable for a long time.
Moral of the story: once a lien claimant records a notice of lien, it must initiate a lawsuit within 180 days or else it will almost certainly lose the underlying lien right.
Help with Construction Lien Issues
This case discussed above does not address every nuance of construction lien deadlines, nor does it discuss many of the various construction lien requirements. It is wise to discuss the unique facts and circumstances related to each individual lien claim. If you have a question about a construction lien and its enforceability, 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].