Can a Utah construction contract waive mechanic's lien rights in advance?
No. A right or privilege under the Preconstruction and Construction Liens chapter may not be waived or limited by contract, and a contract provision purporting to do so is void; a claimant may waive or limit a lien right only in consideration of payment as § 38-1a-802 provides (§ 38-1a-105). Under § 38-1a-802 a claimant's written consent that waives or limits its lien rights is enforceable only if the claimant executes a signed waiver and release (or a restrictive endorsement on a check in substantially the statutory form) AND receives payment of the amount identified, and for a progress payment only to the extent of the payment. A waiver and release meets the section's requirements if it is in substantially the form the section sets out for the circumstance. If payment is made by check and the check fails to clear, the waiver and release is void and the claimant's lien, bond, contract and other payment rights are unaffected.
The trap
On a restrictive endorsement, receiving payment means the check was presented to and paid by the institution it is drawn on, so endorsing alone releases nothing, and if the endorsement does not say whether the check is a progress or a final payment it counts as a progress payment. A waiver signed in exchange for a check that bounces is void by statute, and a progress-payment waiver releases only the amount actually paid. The statutory progress-payment form also excludes retention, pending change items, disputed claims and later-furnished items, and because a waiver is enforceable only once the claimant receives payment, a release signed before payment does not bind until the payment is received. Accord and satisfaction of a bona fide dispute, and settlement of a pending action, can still impair lien rights if in a writing signed by the claimant that specifically references the lien rights.
9 authorities
- statuteUtah Code § 38-1a-105enactment date not established
The words that state the rule
A right or privilege under this chapter may not be waived or limited by contract. A provision of a contract purporting to waive or limit a right or privilege under this chapter is void. Notwithstanding Subsection (1) , a claimant may waive or limit, in whole or in part, a lien right under this chapter in consideration of payment as provided in Section 38-1a-802
- statuteUtah Code § 38-1a-802enactment date not established
The words that state the rule
Notwithstanding Section 38-1a-105 , 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 in substantially the same form set forth in Subsection (4)(d) ; and receives 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.
- statuteUtah Code § 38-1a-802enactment date not established
The words that state the rule
If the conditions of Subsection (3)(a) are met: the waiver and release described in Subsection (3)(a) is void; and the following will not be affected by the claimant's execution of the waiver and release: any lien; any lien right; any bond right; any contract right; or any other right to recover payment afforded to the claimant in law or equity.
- statuteUtah Code § 38-1a-802enactment date not established
The words that state the rule
Notwithstanding the language of a waiver and release described in Subsection (2) , Subsection (3)(b) applies 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.
- statuteUtah Code § 38-1a-802enactment date not established
The words that state the rule
This waiver and release applies to a progress payment for the work, materials, equipment, or a combination of work, materials, and equipment furnished by the undersigned to the Property or to the Undersigned's Customer which are the subject of the Invoice or Payment Application, but only to the extent of the Payment Amount. This waiver and release does not apply to any retention withheld; any items, modifications, or changes pending approval; disputed items and claims; or items furnished or invoiced after the Payment Period.
- statuteUtah Code § 38-1a-802enactment date not established
The words that state the rule
If the conditions of Subsection (5)(b) are met, this section does not affect the enforcement of: an accord and satisfaction regarding a bona fide dispute; or an agreement made in settlement of an action pending in any court or arbitration. Pursuant to Subsection (5)(a) , this section does not affect enforcement of an accord and satisfaction or settlement described in Subsection (5)(a) if the accord and satisfaction or settlement: is in a writing signed by the claimant; and specifically references the lien rights waived or impaired.
- statuteUtah Code § 38-1a-802enactment date not established
The words that state the rule
As used in this section: "Check" means a payment instrument on a depository institution including: a check; a draft; an order; or other instrument. "Depository institution" is as defined in Section 7-1-103 . "Receives payment" means, in the case of a restrictive endorsement, a payee has endorsed a check and the check is presented to and paid by the depository institution on which it is drawn.
- statuteUtah Code § 38-1a-802enactment date not established
The words that state the rule
A waiver and release given by a claimant meets the requirements of this section if it is in substantially the form provided in this Subsection (4) for the circumstance provided in this Subsection (4) .
- statuteUtah Code § 38-1a-802enactment date not established
The words that state the rule
If using a restrictive endorsement under Subsection (4)(d) , the person preparing the check shall indicate whether the check is for a progress payment or a final payment by circling the word "progress" if the check is for a progress payment, or the word "final" if the check is for a final payment. If a restrictive endorsement does not indicate whether the check is for a progress payment or a final payment, it is considered to be for a progress payment.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.