When two parties enter into a work agreement, everyone expects a good outcome. Unfortunately, this does not always happen for many different reasons.
If a contractor or a supplier does not get paid for work they did on a Utah construction project, they can file a mechanics lien in order to secure payment. A mechanics lien is a legal tool that provides payment by granting the unpaid party a security interest in the property.
Who can file a mechanics lien?
Contractors, subcontractors, and anyone else who provides labor or materials to a construction project have mechanics lien rights in Utah. Lien rights are also granted to suppliers of some pre-construction services, such as surveyors.
Is there a deadline to file a mechanics lien?
You must file a notice for a mechanics lien for pre-construction services within 90 days after the completion of your work.
Anyone filing a construction lien for work performed must file a notice within 90 days after the filing date for the Notice of Completion; or if there is not a notice, within 180 days of the completion of the contract.
What happens if the property owner files for bankruptcy?
A mechanics lien is a secured debt. If there is money left at the end of the bankruptcy process, a mortgage is usually paid first. Then the court pays liens in the filing order.
If there is no value left in the property, you might not get paid. If the owner wants to keep the property, they are still obligated to pay secured debts after the bankruptcy process is over.
Filing a mechanics lien allows contractors and suppliers to receive payment when contracts are not honored on construction projects.