Analyzing Mechanics' Lien Claims: a Few Suggestions
| Publication year | 2009 |
| Pages | 30 |
| Citation | Vol. 22 No. 5 Pg. 30 |
Vol. 22, No. 5, 30. Analyzing Mechanics' Lien Claims: A Few Suggestions
Vol. 22, No.5
Sep/Oct 2009
A few years ago I inherited a case in which I was defending my client against a mechanics' lien. Shortly into the case I realized that the plaintiff had filed the lawsuit thirteen months after recording the lien, far outside the statutory requirement of 180 days. I called opposing counsel and explained that the untimely filing of the suit was fatal to his client's lien claim. Plaintiff's counsel (who, by this point, had run up tens of thousands of dollars in fees) reluctantly conceded the point and agreed to dismiss the lien claim. And because the lien statute was the sole basis for the plaintiff's right to recoup its fees, the plaintiff decided to cut its losses and settle the case for pennies on the dollar.
A year or so later, I took on a case in which the lien claimant had failed to file a "Preliminary Notice" with the State Construction Registry, thus depriving him of his lien rights. If I had overlooked this error, my client could have ended up paying thousands in legal fees defending against the lien. As it was, I simply wrote a letter, the claimant released the lien, and my client came away from the experience thrilled at having avoided a lawsuit and its attendant expenses.
In Utah, laws pertaining to mechanics' liens have become increasingly difficult to navigate. The experiences described above prompted me to develop a fairly systematic approach to lien claims, some of the highlights of which are set forth below. While no article can address all possible permutations of Utah's lien laws, this note includes some basic issues that practitioners might otherwise overlook when evaluating lien claims.
Is the Lien Claimant Entitled to File a Lien?
Utah Code section 38-1-3 identifies those parties entitled to file a lien (in essence, anyone who provides labor, materials, or services to improve real property). See Utah Code Ann. § 38-1-3 (2005). In Packer v. Cline, 2004 UT App 311 (mem.), the Utah Court of Appeals affirmed the trial court's invalidation of a mechanics' lien filed by an individual who did not meet these requirements. See id. In Packer, the defendant recorded a purported mechanics' lien for $70,000 against the plaintiffs' (his former in-laws) residence for the value of a mural painted in the residence by defendant's former spouse. See id. para. 2. Because defendant had not provided labor, materials, or services to improve real property, he was not entitled to file a lien. See id. para. 4. Further, defendant was found liable for statutory damages and fees under section 38-9-4(3) of the Wrongful Lien Statute. See id. para. 6.
Was the Lien Timely Recorded?
In order for a lien claimant to preserve lien rights against a residential property, the claimant must record the lien against the property no later than ninety days after the filing of a Notice of Completion or, where no Notice of Completion is filed, 180 days after final completion of the original contract. See Utah Code Ann. § 38-1-7(1)(a)(i)(A)-(B) (Supp. 2008). A lien that is not timely recorded is invalid and unenforceable. See In re Williamson, 43 Bankr. 813, 825 (Bankr. D. Utah 1984).
Was a Suit to Foreclose on the Lien Timely Filed?
A mechanics' lien becomes void, and the district court loses jurisdiction if the lien claimant fails to file an action to enforce the lien within 180 days from the day on which the claimant recorded the lien. See Utah Code Ann. § 38-1-11(2)-(4).
Did...
To continue reading
Request your trial