Preliminary notices are a crucial step for contractors to secure their lien rights. They are meant to protect property owners from “surprise liens” by informing them who is on the project and what they are providing. In Utah, notices are filed through an online platform referred to as the State Construction Registry (SCR) that can be searched by the property owner in question.
However, a recent Utah Court of Appeals case upheld a claimant’s preliminary notice, despite the fact that the company didn’t show up in the property owner’s search results on the SCR.
Learn everything you need to know about the SCR with Utah’s State Construction Registry: A Guide for Contractors & Suppliers
Utah preliminary notices and the SCR
Utah is just one of a few states that have implemented on online system to file notices and other construction-related documents. Back in 2005, the Utah State Construction Registry (SCR) was created with the purpose of increasing visibility for all participants on a construction project.
For contractors, subs, and suppliers, to secure the maximum protection afforded by Utah’s lien laws, a preliminary notice must be filed with the SCR within 20 days of the first date the claimant furnished labor and/or materials to the project. The actual requirements for the notice itself aren’t overly complicated. Utah Code Ann. §38-1a-501(h) merely required that:
“A preliminary notice shall include: (i) the name, address, telephone number, and email address of the person providing the construction work for which the preliminary notice is filed…”
Any participants or stakeholders on construction project can run a search to see all the notices and other documents associated with that particular project.
But what if a notice doesn’t show up in the search? Maybe the information provided wasn’t imput properly, and doesn’t show up in the results? A case out of Utah’s Court of Appeals tackled this exact question.
Preliminary notice switched the claimant’s name and the company’s name
The case in question: Zion Village Resort, LLC v. Pro Curb U.S.A. LLC and Pacific Coast Supply, LLC
- Owner: Zion Village Resort, LLC (Zion)
- Contractor: Pro Curb U.S.A., LLC dba Pro Landscape U.S.A. (Pro Landscape)
Pro Landscape was hired to perform work on a condo development that involved multiple buildings and lots. Pursuant to Utah’s lien laws, four separate preliminary notices were filed with the Utah State Construction Registry by Pro Landscape.
Then, when payment became an issue, Pro Landscape (along with other contractors on the project) filed four construction liens against various portions of the development.
Trial court nullifies lien claims based on invalid preliminary notices
Shortly thereafter, Zion filed a petition to nullify the liens pursuant to Utah Code §38-1a-805; asserting that the liens recorded by Zion were invalid because Pro Landscape had not filed valid preliminary notices.
The district court, in an expedited hearing, issued a ruling nullifying all four of Pro Landscape’s liens. The issue was under the sections entitled “Person Furnishing Labor, Service, Equipment or Material” the name provided was Chad Hansen. And under the comments subsection, the notices stated that “Services provided by Pro Curb USA LLC DBA Pro Landscape.” Pro Landscape appealed the decision.
Appeals court reverses decision based on substantial compliance with the notice requirements
Zion maintained that that since the notices listed the claimant as Chad Hansen, the notices were “statutorily insufficient.” They asserted that when they ran a search in the registry for notices filed by Pro Landscape, nothing showed up. Zion’s stance was that they should be able to rely on the search results of the Registry’s database, and shouldn’t have to go through the “onerous burden of clicking individually through the dozens of notices, loans, permits, etc. related to each parcel number, reviewing line by line the details of each entry, including the comments.”
However, the court noted that the validity of a notice is determined by the actual notice itself, and not the search results page from the Registry’s database.
So, the court concluded that:
“In the end, what matters is whether the statutorily required information is contained in the preliminary notice, and meaningful assessment of that issue may require examination of the actual notice itself, rather than just a search results page from the Registry’s database.
While it is unfortunate that Zion Village’s database search suggested that Pro Landscape had not filed any preliminary notices, our examination of the relevant notices demonstrates that Pro Landscape did file four proper preliminary notices, each of which identified the same property later referenced in the construction liens, and each of which included ‘the name, address, telephone number, and email address of the person providing the construction work for which the preliminary notice is filed’.”
Utah owners can’t invalidate preliminary notices based on technicalities
The statutes governing Utah’s preliminary notice only lists the required information that must be included. There’s no requirement that the information be presented in any specific order. The court agreed that the notices in question set forth the information in an “unconventional sequence,” but they were still filed in time and with all the proper information.
This decision reiterates Utah’s approach to the construction lien statutes that require substantial compliance, rather than a strict interpretation. It also serves as a cautionary tale to Utah property owners, particularly those with projects that span multiple buildings and lots. Relying on a cursory search of the Registry’s database just won’t cut it.