How to Remove Mechanic Liens in Utah
Mechanics liens are liens placed against real property by a contractor who has not been paid in full for his work. Laws on placing and removing mechanics liens vary from state to state. In Utah the lien can only be placed against the property that was improved by the work. A lien must be filed with the county recorder during or in a limited time after the construction period. Only the contractor who did the work and was not paid in full can file the lien. A lien will prevent the property from being sold or encumbered with new loans, (i.e., refinancing or home equity lines) until the lien is satisfied or released.
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Instructions
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Identify the mechanics lien and who placed it to make sure it is legitimate. Is the bill unpaid and is the amount reasonable? A contractor who has not been paid for work on a property files a Notice of Lien with the county recorder in the county where the property is located. The lien is now considered "perfected" if filed during construction or in the short time frame after work is completed allowed by lien law. The contractor then must notify the homeowner by certified mail, in a timely manner, to have a claim and any attorney fees paid.
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Remove the lien that clouds the title by paying the lien. If the lien is legitimate the only sure way to have the lien removed is to satisfy the lien by paying it. The contractor then has 10 days to submit your payment and remove the lien. Only the contractor who placed the lien or a judge may remove a lien. After a lien is placed, the owner may continue to live in the property while the lien is in place while they attempt to satisfy the lien or challenge it in court. The contractor has 180 days to file a lawsuit to enforce the mechanics lien. He then has 180 days to file a "Lis Pendens". If not satisfied the court may order the property sold by sheriffs sale foreclosure to satisfy the lien. The homeowner would receive any proceeds beyond the lien amount and legal fees. If sold the homeowner has a short redemption period to pay the investor who bought the property from the foreclosure sale and recover the property.
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Become familiar with the legal steps the contractor must follow to legally lien the property. Strict time lines apply. If the contractor fails to follow legal procedure the lien will automatically lapse after the stated time periods lapse.
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Contact legal council if you feel the lien was wrongfully filed. You can challenge it in court yourself, but if the amount is substantial a good attorney is worth the expense. If the lien was fraudulent or wrongly filed you may get your legal fees paid by the other party. A judge must rule that the lien was wrongfully placed for it to be release. It will then be removed. It will also be removed by a judge if the contractor who filed the lien did not follow proper procedures, or allows the required time frames to pass without proceeding.
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Submit a bond or cash payment to the county recorder to release the lien during legal proceedings. This will release the lien, but not satisfy it. The cash or bond amount will need to cover the full lien and legal fees and will release the lien from the property during litigation. The money will be returned if you prevail or will be paid to the contractor to cover the lien if you lose in the legal proceedings. The mechanics lien will be released from the property so you can sell or refinance, but this does not satisfy the lien. The bond or cash is held in trust and payable to the contractor who filed the lien if he prevails in his lawsuit or negotiations with you. This step releases the clouded title if needed by setting aside money to cover the lien while the case proceeds.
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Tips & Warnings
There is a Lien Recovery Fund established by the Utah state legislator in 1994 as an alternative fund for contractors to be paid for liens. This is for subcontractors who worked for a general contractor so a new homeowner is not paying twice for work if the general contractor does not pay off sub contractors after he was paid for the home.
Check the State Construction Registry (SCR) for liens on any home you wish to buy that is new construction. Also check for liens filed against your builder on any other projects he is involved in to know if he is in trouble with liens on any development currently.
References
Resources
- Photo Credit New home construction image by Burtsc from Fotolia.com
