Utah Owners Cannot Simply Rely on Construction Lien Registry Search Results to Find Valid Preliminary Notices

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Snell & WilmerIn December 2020, the Utah Court of Appeals found that, because a contractor’s preliminary notice contained the statutorily required information, although in unconventional order, the notice was valid.

In Zion Village Resort, Pro Landscape U.S.A. performed work on a condominium development and filed preliminary notices with the Utah State Construction Registry pursuant to the state construction lien laws. Pursuant to Utah Code Ann. § 38-1a-501(1)(h)(i), a preliminary notice must include certain information, including the “name, address, telephone number, and email address of the person providing the construction work.” In Pro Landscape’s preliminary notices under the line “Person Furnishing Labor, Service, Equipment, or Material,” the Pro Landscape listed “Chad Hansen,” and provided an address, email address and telephone number. Under the line provided for “comments,” the notices stated that the “services [were] provided by Pro Curb USA LLC DBA Pro Landscape USA.” Pro Landscape later filed construction liens on various parts of the development.

Zion Village filed a petition to nullify the construction liens, arguing that the they were invalid because Pro Landscape failed to file valid preliminary notices as required by statute. The trial court concluded that the notices were filed by Chad Hansen, not Pro Landscape, and therefore the notices “neglected to include such basic information as the identity of the actual lien claimant.”

On appeal, Pro Landscape argued that the preliminary notices contained all the statutorily required information, including the name, address, telephone number and email address of the person providing the construction work. Zion Village argued that because Chad Hansen rather than Pro Landscape is listed on the line asking for identification of the “Person Furnishing Labor, Service, Equipment or Material,” the notices were deficient.

The court found that Pro Landscape, by identifying itself in the comments section of the preliminary notice, had substantially complied with the statute. “While Pro Landscape may have set forth the required information in an unconventional sequence, the preliminary notices it filed contained all statutorily required information.”

Zion Village argued that the court’s holding frustrated the practical functioning and purpose of the registry, which serves as a database that allows interested persons to search for preliminary notices on a property. When Zion Village searched the registry’s database for preliminary notices filed by Pro Landscape, none turned up in the result because “Chad Hansen” and not Pro Landscape was listed on its notices as the “Person Furnishing Labor, Service, Equipment or Material.” Zion Village asserted that interested persons should be able to rely on the search results without having to searching through all preliminary notices individually. The court was not persuaded, noting that the construction lien statute mandates the application of a “substantial compliance” standard, rather than a strict compliance standard.

The court’s holding in Zion Village stands as a warning to property owners that one cannot rely on the search results to determine whether a party has a preliminary notice on file. Given the “substantial compliance” standard, as long as a preliminary notice has the statutorily required information in the notices somewhere, it is valid.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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