Notice of Release of Lien and Substitution of Alternate Security

During the 2001 Legislative session, the legislature passed Utah Code section 38-1-28, which provides that an owner or general contractor may post a surety or cash bond as alternate security, in exchange for a release of the mechanic’s lien. Utah Code Ann. § 38-1-28 (Lexis 2005). As amended since 2001, the amount of the bond is set at 150% of the amount claimed by the lien claimant if that amount is $25,000 or more, 175% if the amount claimed is between $15,000 and $25,000, and 200% if the amount claimed is less than $15,000. The amount of any lien claim is set by the lien claimant himself at the time he files the notice of claim. Utah Code Ann. § 38-1-7(2)(a)(vi) (Lexis 2005). As a result, it is important that the lien claimant correctly determine all amounts that are owed at the time he files the initial notice of claim.

Costs - Include them in the lien amount

Costs are also recoverable by the successful contractor, subcontractor, materialman or laborer. However, the court has the option of apportioning the costs between the owner and an original contractor according to the “right of the case.” See Utah Code Ann.§ 38-1-17 (Lexis 2005). Costs may include expenses incurred in preparing and recording the notice of claim of lien, including filing fees, court fees, and reasonable attorneys’ fees incurred in preparing and recording the notice of lien.

Attorney’s Fees for the “Successful Party”

According to Utah Code section 38-1-18 , “[i]n any action to enforce any lien under this chapter the successful party shall be entitled to recover a reasonable attorneys’ fee, to be fixed by the court . . . .” Utah Code Ann. § 38-1-18 (Lexis 2005). Notice that this section can cut both ways. If the contractor loses, he will be liable for not only the owner’s attorneys’ fees but for any other attorneys’ fees incurred by other individuals who had a security interest in the property which required them to defend the action. This is just one more reason that careful compliance with the statutory requirements is essential.

Including Interest in the Liened Amount

A lien claimant is usually entitled to interest on the sums he recovers in a lien foreclosure action. Unless a different rate is agreed upon by the parties pursuant to a contract, the interest awarded to a successful lien claimant will be ten percent per annum before judgment. Utah Code Ann. § 15-1-1 (Lexis 2005). In addition, once a lien claimant obtains a final judgment, he is entitled to the federal postjudgment interest rate as of January 1 of the year in which the judgment is obtained, plus two percent. Id. § 15-1-4(3)(a); see also 28 U.S.C. 1961(a) (2003).

See Post Judgment Interest Rates, available at
http://www.utcourts.gov/resources/intrates/interestrates.htm