With the big push to sell out the new construction inventory sitting on the market in Utah, through the Homerun Grant Program (358 grants remaining as of today) and various builder incentives, a prudent homebuyer and their agent should familiarize themselves with Utah's State Construction Registry. This is especially important in light of the high number of contractor/builder bankruptcy filings that our current real estate market is facilitating.
The SCR was enacted in 2004 as House Bill 136, Sixth Substitute, Electronic Filing of Preliminary Lien Documents. It was designed to avoid the complications that frequently arise from Mechanic's Liens that show up after closing. It is a phenomenal system when used properly. However, the timelines are critical (see below) in order to protect yourself from reverting to the state's lien rights.
Why should you care? Educational Video for Property Owners
Municipalities in Utah are required to file a Notice of Commencement within 15 days of a building permit being taken out on a property, but don't rely on the city to do this! Other parties who should or must file are 1) the General (aka Original) Contractor and 2) the Owner. Other interested parties can sign up for notification, as well, such as the lender and the title company.
What the registry does is to require subcontractors to electronically file their "preliminary notice" that they have done work on a particular construction project. The beauty of the system is that whenever one of these "preliminary notices" are filed, all parties who are registered on the project (contractor, owner, lender, title) receive email notification. What a great way to track the subs who have worked on your home, in case you need to contact them after you move in, and avoid dealing with unpaid subcontractor services after closing!
If you are buying a completed "spec" home, then you should check out the Public Search Site to see if you are protected from liens by the SCR. You can also make sure that your owner's title policy is either a Plain Language Policy or an Eagle Policy.
Excerpt & Overview from Utah's State Construction Registry Site:
Filing Timeline
Key Dates & Details:
Notices of Commencement
Notices of Commencement must be filed within 15 days of commencement of physical work or the issuance of a building permit. If a Notice of Commencement is not filed within the 15-day window the preliminary notice requirement is voided and lien rights are automatically preserved.
For the majority of projects, Notices of Commencement are automatically filed in the SCR based on permit data received from the issuing municipalities. For projects in which a Notice of Commencement is not automatically filed, owners and original contractors may file a Commencement in order to enforce the preliminary notice requirement. Examples: state projects in which permits are not issued, exempt projects, projects in which a municipality fails to transmit permit data.
Preliminary Notices
Preliminary notices must be filed within 20 days of furnishing labor, service, material and/or equipment OR within 20 days of the filing of the notice of commencement, whichever comes later.
The timeline for filing a preliminary notice is affected by the filing of a Notice of Completion. The window for filing Preliminary Notices is closed 10 days after the filing of a Notice of Completion. Therefore, parties providing goods and services at the end of a project may have less than 20 days to file their Preliminary Notice (a party providing materials 2 days prior to the filing of a Notice of Completion only have 12 days total to file a Preliminary Notice).
A party that misses their initial 20-day window may still file a Preliminary Notice to protect future work and / or materials. If a Preliminary Notice is filed after the initial 20-day period passes, there is a 5-day penalty and any material and / or service provided after the penalty period is protected.
Notices of Completion
Notices of completion may be filed by owners, original contractors, lenders, surety or title companies anytime after one of the following conditions has been met:
- A permanent certificate of occupancy has been issued
- A final inspection has been completed
- All substantial work has been completed
Kim Novak is a real estate broker with RE/MAX Masters in Salt Lake City and Layton, Utah. She holds a BSBA with an emphasis in Sales & Marketing and has achieved the designations of ABR: Accredited Buyer Representative, CRS: Certified Residential Specialist, CSP: Certified New Home Sales Professional, GRI: Graduate of the Realtor® Institute, SRES: Seniors Real Estate Specialist and ePRO: Internet Professional. Licensed in 1995, Kim has closed over 500 sales during her full time real estate career. ActiveRain Profile LinkedIn Profile Facebook Me!
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