Utah Conditional Lien Waiver on Progress Payment

In Utah, mechanic's liens are governed under Title 38, Chapter 1A of the Utah Code.

Throughout the construction process, claimants (eligible contractors) may elect to serve the property owner with a lien waiver in exchange for partial or full payment. Title 38, Chapter 1a, Section 802 sets forth requirements for lien waivers.

The term "waiver" refers to giving up a legal right. In this case, the person granting the waiver is giving up the right to seek a mechanic's lien for all or part of the amount due. This assurance is usually enough to induce the other party to pay. Many states authorize both conditional and unconditional waivers. In Utah, however, if the payment given in exchange for any waiver and release of lien is made by check; and the check fails to clear the depository institution on which it is drawn for any reason, the waiver and release is void. Id. So, in contrast to other states, Utah offers stronger protection for contractors using lien waivers.

A claimant's written consent that waives or limits the claimant's lien rights is enforceable only if the claimant executes a waiver and release that is signed by the claimant or the claimant's authorized agent; or for a restrictive endorsement on a check, includes a restrictive endorsement on a check that is signed by the claimant or the claimant's authorized agent; and includes restrictive language that specifies that payment is for a waiver. 38-1A-802.

For any waiver to be effective, the claimant must also receive payment of the amount identified in the waiver and release or check that includes the restrictive endorsement, including payment by a joint payee check; and for a progress payment, only to the extent of the payment. Id.

Use the "Conditional Waiver and Release of Lien upon Progress Payment" if the claimant is required to execute a waiver and release in exchange for or to induce the payment of a progress billing. 38-1A-802(4)(b). The document includes the property name (if any), property location, customer's name, invoice or payment application number, payment amount, and payment period. Id. Sign and date the form in the presence of a notary, then submit it to the local recording office if the claimant is releasing part of a previously filed lien. Otherwise, deliver it to the customer and/or property owner in exchange for the progress payment.

This article is provided for informational purposes only and should not be relied upon as a substitute for advice from an attorney. Please contact a Utah attorney with any questions regarding construction liens or lien waivers.