Time after time, Utah homeowners and housing developers, forging ahead with private construction projects, are finding it difficult to make timely payments to the suppliers, sub-contractors, and general contractors they hire to help them with their construction projects. When contractors have trouble collecting payments for their services, one of the most effective tools to achieve this is by issuing a mechanic’s lien in Utah. Although a lien can be a powerful method of securing payment due to a contractor, there are certain rules that must be followed to insure the legalities of this action, starting with the pre-lien notice.
Under Utah law, all contractors and suppliers must file a preliminary notice of their participation in the project in order to secure their right to file a mechanic’s lien in the future. This notice must be filed no later than 20 days following the commencement of a project. The 20 days starts from the time the contractor begins work on the project or the supplier purchases materials for the project. If a contractor or supplier fails to file the proper paperwork, they may forfeit their rights to use a mechanic’s lien as a legal way to collect funds owed to them.
Filing a Mechanic’s Lien
Once it is determined that payment for services through regular invoicing and collection methods is not feasible, the contractor or supplier may opt to file a lien. This paperwork must be filed within 90 days of the pre-lien completion notice. In cases where a notice was not filed, the contractor or supplier may still be able to file for a lien if they file within 180 days after the completion of the project.
The cost for filing a mechanic’s lien is regulated by state laws. In Utah, the cost to file the appropriate paperwork and begin the process is roughly $290. Of course, filing fees are always at the discretion of the state legislature. Therefore, it is advisable that companies check with the appropriate authorities to make sure the fee has not changed prior to filing a lien. Companies should also speak with an attorney to see if filing fees can be passed onto the customer as part of the total amount due on the lien.
Contractors and suppliers that consider liens as a way of obtaining quick payment are often disappointed by the results. A mechanic’s lien merely places restrictions on the property’s title that can make it difficult to resell or refinance the property. It does not force a person to pay right away. When the property owner goes to sell the property, the outstanding debts must be settled for the lien to be removed from the property. However, a person can hold onto a property for years before they decide to sell.
Also, it is important for contractors and suppliers to understand that liens do stay on the title for an unspecified amount of time. They do have expiration dates, making it necessary to file another lien. Contractors and suppliers who use liens as a means to collecting money owed to them fast can easily get frustrated by the lethargic nature of collecting money via a mechanic’s lien.
Contractors, sub-contractors, and suppliers may want to consider other means of collecting payments owed to them than by filing a mechanic’s lien in Utah. Legal remedies such as lawsuits may seem more costly, but if the court rules in favor of the contractor then collection activities like wage and bank garnishment may help these individuals recover funds in a quicker fashion. Ideally, contractors and their customers should work together to find solutions to resolve debts without involving liens or lawsuits.