Utah’s mechanics lien law was amended to take into account the rising number of bankruptcies. It is wise to be mindful of implications bankrupcty may have on the filing of a construction lien; or the implications the filing of a construction lien may have on a decision to file for bankrupcty. The mechanics lien laws have potential impact on how a claim will be pursued in the bankruptcy realm. In Utah, the legislature recognized the apparent conflicts that arise in these two areas of law when an owner or developer files for bankrupcty.
With regard to the push and pull of bankruptcy laws and the filing of a lien in Utah, the state government in Utah decided that protection of the contractor or subcontractor is preferred. The new Utah mechanics lien law provides additional time for Utah construction lien enforcement actions to account for a bankruptcy filing. If the owner of the subject property becomes the subject of a bankruptcy proceeding before the expiration of the 180-day period to initiate an action in enforcement of the construction lien, then that filing deadline is automatically extended to 90 days after the automatic bankruptcy stay ends.