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Can a business file a lien on a homeowner if the homeowner also owns the business?

Anonymous Contractor

If I purchase a home using hard money. My business loans me money for renovation costs. The intent for me to refinance with conventional funding on completion. Can my business file a lien on the property to assure reimbursement of the renovation loan at the time of refinancing?

1 reply

Matt Viator

Construction Lawyer

Levelset Admin at Levelset

| 1,000 reviews

Jan 20, 2020

Nothing in Utah's mechanics lien statute appears to limit the ability of an owner-builder to lien their own property. As set out at § 38-1a-104, owner-builders are considered to be original contractors for themselves. And, original contractors will very typically be entitled to mechanics lien rights. Very notably, though - using a statutory mechanics lien might not make all that much sense for voluntarily securing a debt. Certainly, mechanics liens are available for those who have construction debts outstanding. However, liens are intentionally designed to be a bit adversarial. And, the timeframe for resolving a mechanics lien is quite intentionally pretty short in the grand scheme of things. Once a Utah mechanics lien is filed, the lien claimant must file suit to enforce the claim within 180 days - otherwise, the mechanics lien claim will expire and ultimately be pretty useless. Generally, when a lien is being voluntarily given, it's often a better idea to draw up a construction loan agreement between the lender and owner and to secure that debt with a voluntary lien with easier terms and timeframes than a mechanics lien. That, or pursuing some option other than a lien against the project property. For help on how best to set up a lien agreement or other debt security, it'd be wise to reach out to a local Utah construction or real estate attorney. They'll be able to review your situation and advise on how to reach your goals.

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