Utah
Construction Lending State Compliance Library
State statute reference
Last updated October 28, 2022
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Utah Construction Lien Law
Lien Law Overview
Generally, mechanics lien statutes apply to both residential and non-residential construction. Title and investor guidelines will control requirements for both loan types. Some states have general requirements that may impact non-residential and/or residential properties.
Lien Waivers
Lien Waiver Summary
Lien waivers are valid if they are provided in consideration for payment and adhere to the statutory form. Additionally, the waiver must be written and signed by the claimant.
It’s important to note that any provision in a contract that attempts to waive or limit preconstruction lien or lien rights is void.
Statutory Form
Required
Notary
Not Required
Electronic Signature
Acceptable
Are title companies required by law to manage construction loan disbursements?
No
Can a mechanics lien have priority over a pre-existing mortgage in Utah?
Pre-Construction Liens: A Pre-Construction Lien relates back to the time of filing of the first Notice of Preconstruction Service and has priority over any lien, mortgage, or other encumbrance: i) that attaches after the first Notice of Preconstruction Service is filed -or- ii) of which the claimant had no notice and that was unrecorded when the first Notice of Preconstruction Service was filed. A preconstruction lien is subordinate to an interest securing a bona fide loan if and to the extent that the lien covers the preconstruction service provided after the interest securing a bona fide loan is recorded. Utah Code Ann. § 38-1a403.
Construction Liens: Construction liens relate back to the date on which the first preliminary notice was filed in the Utah State Construction Registry (USCR), and have priority over any lien, mortgage, or other encumbrance: i) that attaches after the first Preliminary Notice is filed -or- ii) of which the claimant had no notice and that was unrecorded when the first Preliminary Notice was filed. A recorded mortgage or trust deed that secures a construction loan attaches immediately before the first Preliminary Notice filing for the construction project if each claimant that has a Preliminary Notice on file before the mortgage or trust deed was recorded is paid in full for all construction work performed before the mortgage or trust deed was recorded. This is true regardless of whether the claimant is paid in full before or after the mortgage or trust deed was recorded. Utah Code Ann. § 38-1a-503.
Notices
Notice of Commencement (or similar like event)
Please note the differences between a ‘Notice of Construction Loan’ and a ‘Notice of Commencement’.
Notice of Construction Loan – Yes, after recording a mortgage or trust deed securing a construction loan on a private project, a construction lender must promptly, in conjunction with the closing of the construction loan (e.g., at closing), file a Notice of Construction Loan in the USCR. Utah Code Ann. § 38-1a-601.
Notice of Commencement – Yes, On government projects only, a notice of commencement is required to be filed. Utah Code Ann. § 38-1b-201. Government projects are not subject to the Utah mechanics lien law. Utah Code Ann. § 38-1a-103. “Government project” means a construction project undertaken by or for: (a) the state, including a department, division, or other agency of the state; or (b) a county, city, town, school district, local district, special service district, community reinvestment agency, or other political subdivision of the state. Utah Code Ann. § 38-1b-102.
Note that a Notice of Commencement is not required on private (non-government) projects.
Who files?
Notice of Construction Loan: The construction lender or title company.
Notice of Commencement: The contractor or owner files for Government projects.
When must it be filed?
Notice of Construction Loan: Promptly after recording a Trust Deed for a construction loan.
Notice of Commencement: 15 days after work on the job site has begun
Preliminary Lien Notifications
It is mandatory for all parties involved in a construction project to issue a preliminary notice before making a valid lien claim. This notice should typically be sent within 20 days of the initial provision of labor and/or materials to a construction project and must be filed through the Utah State Construction Registry. (USCR) Utah Code Ann. § 38-1a-401.
Notice of Completion
Yes. For both Private and GovernmentGoverment Projects. Utah Code Ann. § 38-1a-507
It may be filed by Contractors, Owners, or Title Companies.
When Must it be Filed
The Notice of Completion must be completed on the Utah State Construction Registry after receiving the certificate of occupancy, final inspection, or all substantial work is complete. Once a Notice of Completion is filed, all remaining preliminary notices must be filed within 10 days and the time to file a lien is shortened to 90 days instead of 180 days.
Title
Utah uses ALTA title commitments that allow for the Construction Loan Update Endorsement, which is used when the lender requests endorsements as additional disbursements are made. It gives coverage up to the new outstanding mortgage balance and shows whether any other instruments have been filed and recorded since the last title update. The endorsement also insures the priority of the insured mortgage over instruments that are not specifically listed in the endorsement. Since the title company has a stake in the disbursements, you may find that they exercise some due diligence relating to construction draws.
Contractor Licensing
Contractor Requirement: License always required.
Subcontractor Requirement: Subs must be licensed.
Contractor Warranties: Implied warranty of workmanship and habitability, free of latent defects. From recent case law with narrow interpretation. Cannot be waived by contract.
FAQs
Are invoices required to be submitted with each draw request?
We were unable to find any statutory references to the collection of invoices in exchange for payments (the draw request), however, this is from a statutory perspective. The construction loan agreement, construction contract, and/or may require the lender to collect invoices to validate and reconcile against work performed, lien waivers, and the budget of record.
Please note that the state of Utah does have well-considered concepts regarding construction lien law, such as statutory waivers, preliminary notice requirements, Notice of Construction Loan (Notice of Commencement for Public Projects), and Notice of Completion. Please review the entire state lien law to learn more about what the state’s process to obtain and maintain first lien priority.
Have Questions?
Reach out if you have any comments or questions about our state resources.
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