When Can You Impose a Mechanics Lien?

When Can You Impose a Mechanics Lien?

A mechanics' lien is an encumbrance against property for work that has gone unpaid. It is a fairly common legal remedy in construction contract cases. A business lawyer may file this type of lawsuit to help a client recoup his or her earnings. Mechanics liens can be filed for services rendered ,or for materials used. In the case that the lien is not satisfied, it may be possible to foreclose so that the sale proceeds can cover the lien. Mechanics liens in Utah are complicated, but we will explain some of the basic components here.

The Applicable Statute

The law regarding mechanics' liens is found in the Utah Annotated Code, Section 38-1-1, et seq. Per this statute, any contractor or subcontractor performing a job entailing construction or some type of property improvement qualifies to file a lien. The statute also covers professionals such as architects, artists or engineers who have produced design plans for the property. It may also cover a business who rents equipment to a contractor or homeowner to complete the project.

There are a couple restrictions to the ability to file a line. First, the lien must attach to the property where the services or equipment are used. Second, the lien can only be attached to the part of the land in which the owner (debtor) has an interest.

Notice Requirements

The notice requirements for a mechanics' lien are fairly complicated. It is best to discuss filing procedures with a business law attorney. In general, there are two notice issues that you should be aware of. First, there are different filing deadlines depending on whether the lien is for construction, or pre-construction purposes. Second, all of these liens require some form of preliminary notice. For construction liens, the notice needs to be served within 20 days from the completion of the work. For a pre-construction lien, the notice must also be done within a 20 day period following the start of services.

Filing Requirements

After notice is given, the next step is to file the lien with the appropriate court. There are different filing deadlines depending on the circumstances of the case. In cases where a notice of completion was filed, the deadline is 90 days from the filing. In some scenarios, this time period may be extended to 180 days following the completion of the project. In cases without a notice completion, the deadline is 180 days following the completion of the contractual terms. In either case, the term "final completion" has a very specific legal definition. Consult your business attorney for additional help.

A Final Consideration

Mechanics' liens are an important part of the construction industry. They help preserve a contractor's right to receive payment for services rendered. Some construction companies go through the lien process without an attorney. However, due to the potential for complications, it is always a good idea to use a business law attorney.

If you have questions about a mechanics' lien in Utah, contact Spencer and Collier, PLLC.

Tags: business law, mechanic lien, encumbrance

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