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House approves mechanics-lien reform, creates contractor-funded recovery fund
Summary
The Utah House passed substitute Senate Bill 87 after floor amendments, establishing a recovery fund to reimburse subcontractors and limit homeowners’ exposure to duplicate mechanics liens; the bill funds the program by assessing fees on licensed contractors.
The Utah House on the floor passed substitute Senate Bill 87, a measure to limit homeowner exposure to duplicate mechanics liens and create a contractor-funded recovery fund for unpaid subcontractors.
The bill’s sponsor told members the measure is “a consumer bill that is designed to protect homeowners from mechanics lien being filed against their homes where the homeowner has already paid for the work.” The proposal creates a lien-recovery fund, financed by fees assessed to licensed contractors in Utah; the sponsor estimated the average fee would be approximately $200 and said the fund is capped at $2,500,000 with reimbursements of up to $75,000 per home.
Debate centered on who should pay and how fees would be set. Representative Short, who declared a conflict as a subcontractor, supported a floor amendment requiring suppliers to contribute, arguing it “levels the playing field” so suppliers and subcontractors share fund responsibility. Representative Peterson and others pushed amendments to change the board composition and to identify an initial appropriation source; fellow members and a Department of Commerce staffer warned that a proposed $1,200,000 transfer would pull money that currently includes fees paid by many professional groups and may not be legally or politically appropriate without clearer authority.
Sponsor and supporters said the bill addresses a recurring consumer problem in which homeowners can be asked to pay twice for work that has already been performed and paid. Multiple members described local examples of homeowners and small subcontractors harmed by practices of larger general contractors who failed to pass payments down the line.
After amendment and debate, the House voted to pass substitute SB 87 as amended; the tally announced on the floor was 65 affirmative and 8 negative votes. The bill will be returned to the Senate for consideration of the House floor amendments.
The day’s discussion left unresolved certain quality-control protections for homeowners (for example, the bill does not address claims that work was substandard) and left the advisory board’s initial classifications for fee-setting to the board rather than statute. Supporters said those were separate issues for future bills.
