In 2005, the State of Utah introduced a State Construction Registry (SCR) to better manage the parties involved in construction projects. Since then, Utah has required all parties working on a construction project to file notices on the SGR in order to maintain their right to lien. Whether you are an owner, a contractor, or a subcontractor, you will benefit by using the registry.
Let's look at two examples that illustrate why the SCR tool is helpful. Suppose two parties enter into a contract, an owner and a contractor. The contractor can file a lien against the owner's property if he/she is not paid. The owner can only have the lien removed after paying for the work. In this case, the lien is "clean" and provides incentive for the owner to pay the contractor when the project is complete. When the project involves more parties, the owner might be liable for an amount they already paid.
A more complicated example is as follows. Suppose an owner and a contractor enter into a contract. The contractor then signs a contract with a subcontractor for a part of the work, and then the subcontractor enters a contract with a supplier for supplies. Suppose, additionally, that the project is completed and the owner pays the contractor. The contractor pays the subcontractor, but the subcontractor does not pay the supplier. In this case, the only relief the supplier has is to file a lien against the owner. The owner ends up paying more than the contract price, and the subcontractor is unjustly enriched. The purpose of the SCR is to increase visibility by all parties as to who is participating in the project, and if each party is paid at the end of the project.
If you are an owner, you want the ability to see who is working on the project. You will see preliminary notices filed by those who want to maintain their right to lien. You can create an account by visiting this link and logging in with your utah.gov account or creating a new one. You will need to pay a $5.00 fee to view notices filed on your project. Once you have paid the fee, you will receive automated email messages whenever a notice is filed for your project. You can then utilize joint check agreements and direct pay agreements to help your property remain lien-free.
If you are an original contractor, you want to use the SCR to keep track of all parties involved in the project. This allows you to minimize your liability and also allows you to form joint check agreements and use lien waivers. As the contractor, you are required to file several notices throughout the construction process. Failing to do so may create potential problems.
Finally, if you are a supplier or subcontractor, you want to use the SCR to ensure you are paid. By filing a preliminary notice, you signify to the owner and contractor that you expect to be paid for the work you perform on the project.
The SCR tool is as easy as scanning a QR code from your smartphone and filing the notice. Having all parties file minimizes payment problems and party liability. If you have any questions, please contact us today or stop by our office. We can help you understand the SCR tool and answer your questions about construction liens. Contact us today if you have any questions regarding the SCR or lien laws in Utah.