This opinion is subject to revision before final
publication in the Pacific Reporter
2025 UT 14
IN THE
SUPREME COURT OF THE STATE OF UTAH
NEW STAR GENERAL CONTRACTORS, INC.,
Appellee,
v.
DUMAR, LLC and DUANE SHAW,
Appellants.
No. 20230639
Heard December 13, 2024
Filed May 22, 2025
On Direct Appeal
Seventh District Court, Grand County
The Honorable Don M. Torgerson
No. 200700055
Attorneys:
Brian J. Babcock, Andrew L. Berne, Salt Lake City, for appellee
J. Tayler Fox, John R. Richardson, Salt Lake City, for appellants
CHIEF JUSTICE DURRANT authored the opinion of the Court, in
which ASSOCIATE CHIEF JUSTICE PEARCE, JUSTICE PETERSEN,
JUSTICE HAGEN, and JUSTICE POHLMAN joined.
CHIEF JUSTICE DURRANT, opinion of the Court:
INTRODUCTION
¶1 New Star General Contractors, Inc. (New Star) sued to
enforce its construction lien on twelve condo units in a large
development in Grand County after the developer, Sage Creek at
Moab, LLC (Sage Creek), failed to pay for New Star’s construction
work. The units’ owners, Dumar, LLC, and Duane Shaw
(collectively, Dumar), challenged the lien on multiple grounds. The
district court ruled that New Star could enforce its lien. Dumar
appeals.
NEW STAR v. DUMAR
Opinion of the Court
¶2 Dumar first challenges the two sets of preliminary notices
New Star filed with the state construction registry to preserve its
lien rights. It asserts the first preliminary notices—filed for the
whole development—could only support a lien for the sitework.
And it argues the second preliminary notices—specific to Building
C, the site of the twelve condos at issue here—did not list the right
parcel numbers as required by Utah Code section 38-1a-501. We
assume without deciding that New Star was required to file the
second preliminary notices. But we conclude that, despite New
Star’s failure to include the correct parcel numbers, the second
preliminary notices substantially complied with the statute because
a reasonably diligent search of the registry would have returned
the preliminary notices. We therefore decline to analyze the first
preliminary notices.
¶3 Dumar next argues New Star’s lien is invalid because New
Star failed to allocate its expenses between the units and the
common areas of the building. We hold that the relevant statutes
do not require that allocation to establish a valid lien.
¶4 Dumar then asserts the district court miscalculated the
amount it owed under the lien. We agree that the district court
erred in allocating all the costs of constructing Building C to
Dumar, rather than limiting Dumar’s liability to its ownership
share in the development. We remand for the district court to
determine the correct amount Dumar owes under the lien based on
Dumar’s ownership share.
¶5 Finally, having held that the district court miscalculated
the lien amount, we vacate its order dismissing Dumar’s excessive
lien claim and entering an attorney fee award for New Star. We
direct the district court to reconsider both issues on remand.
BACKGROUND 1
¶6 In 2017, Sage Creek contracted with New Star to develop a
property in Moab. Together, they hoped to build nine condo
buildings, each containing twelve units, for a total of 108 condos.
New Star and Sage Creek “entered into a master agreement . . . for
the entire development[,] . . . contingent upon financing being
available for each building.” Then, as construction progressed, they
__________________________________________________________
1 “On appeal from a bench trial, we view the evidence in the
light most favorable to the district court’s findings.” In re W. Ins.
Co., 2022 UT 38, ¶ 7 n.1,
521 P.3d 851 (cleaned up).
2
Cite as: 2025 UT 14
Opinion of the Court
amended the contract to include specifics for each building. Sage
Creek financed the development with a loan from Broadmark Real
Estate Management II, LLC (Broadmark), secured by a deed of trust
with the development property as collateral.
¶7 In January 2018, to preserve its lien rights, New Star filed
three preliminary notices with the state construction registry (first
preliminary notices), listing the tax parcel numbers of the three
parcels that comprised the entire development. The notices
identified Sage Creek as the owner of the development and
described the project as “108 NEW CONDO UNITS.”
¶8 In November 2018, Sage Creek recorded the condo
declaration for the development, establishing new parcel numbers
for each condo unit and describing the bounds of each unit and the
common areas. The declaration divided ownership of the common
areas equally between the 108 units, giving each unit a 1/108
ownership share in the development. 2
¶9 The next month, Sage Creek and New Star signed a
contract amendment for Building C. New Star then filed a second
set of three preliminary notices for Building C (second preliminary
notices). The notices listed the original three parcel numbers, rather
than the new parcel numbers established by the condo declaration
for the Building C units.
¶10 In April 2019, Dumar, LLC contracted with Sage Creek to
purchase six units in Building C for $3.3 million. Dumar, LLC’s
minority partner, Shaw, contracted to buy the remaining six units
for $3.3 million. Each contract included an ownership interest in
part of the development’s common areas, as laid out in the condo
declaration. Later, Dumar negotiated a $1.65 million credit from
Sage Creek, as part of a deal on a different real estate development.
¶11 Dumar closed on its purchases in late April 2019. At
closing, Dumar paid off the portion of Broadmark’s loan secured
by the deed of trust on Dumar’s twelve units and its interest in the
common areas, releasing the deed of trust from its units.
__________________________________________________________
2 The district court opinion appears to contain a typo, stating
that each unit owned a 0.09259% share in the development. The
declaration describes a 0.9259% ownership share for each unit,
consistent with the court’s finding that each unit owned 1/108 of
the common areas.
3
NEW STAR v. DUMAR
Opinion of the Court
¶12 In total, Building C’s construction cost about $3.9 million.
Sage Creek paid New Star for some work on Building C. Dumar
also paid about $2.75 million in several installments to New Star, as
New Star submitted invoices for Building C to Sage Creek. New
Star applied most of Dumar’s payments toward the outstanding
invoices for Building C. But it sometimes applied Dumar’s
payments to other parts of the development, based on direction
from Sage Creek or the age of the outstanding invoices. After
Dumar paid all it owed under its agreement with Sage Creek, Sage
Creek ran into financial difficulties and failed to pay New Star for
the rest of the work on Building C.
¶13 After Sage Creek’s default, further work on the
development stalled, leaving complete only Building C and three
other buildings out of the nine buildings Sage Creek and New Star
had originally envisioned. New Star was paid in full for the work
on the other three buildings. Broadmark foreclosed its deed of trust
on the development. But because Dumar had previously paid off
Broadmark’s interest in its twelve units and its share of the
common areas, Broadmark’s foreclosure did not reach Dumar’s
ownership interest. 3
¶14 In June 2020, New Star filed a notice of construction lien
against Dumar’s units, seeking payment of about $1.2 million.
After one of New Star’s subcontractors filed suit against New Star
to recover for its work on Building C, New Star filed a third-party
complaint against Sage Creek and Dumar. New Star sought to
enforce its contract with Sage Creek and foreclose its construction
lien against Dumar.
¶15 In response, Dumar challenged the validity of the lien on
several grounds. It asserted that none of New Star’s preliminary
notices substantially complied with the Construction Lien Statute,4
__________________________________________________________
3 Broadmark’s foreclosure also did not affect four units in
Building E that are not at issue in this appeal.
4 UTAH CODE §§ 38-1a-101 to -805. Before the legislature enacted
the current version in 2012, the statute and caselaw referred to
construction liens as “mechanics’ liens.” See Liens for
Preconstruction Service and Construction Work, H.B. 131, 2012
Leg., Gen. Sess. (Utah 2012). We refer throughout this opinion to
“construction liens” and the “Construction Lien Statute,” even
when referencing older caselaw.
4
Cite as: 2025 UT 14
Opinion of the Court
because the first preliminary notices, which described the whole
development, could only support a lien for sitework and not later
vertical work on Building C. It then argued that the second
preliminary notices used the wrong tax parcel numbers to identify
Building C. It also claimed that the construction lien notice was
invalid for failing to allocate the amount of the lien between the
units and the common areas of Building C. Dumar argued that this
omission meant it could not calculate its proportional share of the
lien based on its limited ownership interest in the common areas,
and thus could not exercise its statutory right to pay off the lien on
its units.
¶16 Dumar also filed a counterclaim, asserting that New Star
filed an excessive lien against its units. Dumar’s theory turned on
the impact of the Broadmark foreclosure on the development.
Broadmark’s foreclosure had wiped out New Star’s junior lien
against the rest of the development, preventing New Star from
collecting unpaid amounts from the other unit owners. But because
Broadmark had released its deed of trust on Dumar’s units before
the foreclosure, New Star’s lien remained intact on Dumar’s units.
Without a lien on the other units, New Star had an incentive to
allocate payments to expenses on those units first, ensuring it could
recover its costs. Then, it could apply any remaining balance to its
lien against Dumar’s units in Building C, even though Dumar had
already paid its fair share for its units. Based on this logic, Dumar
argued that New Star intentionally applied about $475,000 of
Dumar’s payments to other parts of the development in an attempt
to recover more than it was actually owed for Dumar’s units.
¶17 After a one-day bench trial, the district court entered a
nearly $1.2 million judgment for New Star on its contract claim
against Sage Creek. The court also concluded that New Star’s lien
was enforceable against Dumar. The court rejected Dumar’s
challenges to the validity of the lien itself, determining that New
Star’s first preliminary notices were sufficient, and that New Star’s
lien was valid despite New Star’s failure to allocate expenses
between the units and the common areas. The court then concluded
that New Star could foreclose against Dumar’s units to recover the
full amount of its lien, reasoning that Dumar owned all twelve
units in Building C, and that each unit was responsible for paying
1/12 of the cost of construction of the common areas, adding up to
the full balance owed on Building C. The district court also rejected
Dumar’s excessive lien claim, declared New Star the prevailing
5
NEW STAR v. DUMAR
Opinion of the Court
party, and ordered Dumar to pay costs and attorney fees. Dumar
appeals.
ISSUES AND STANDARDS OF REVIEW
¶18 Dumar first challenges New Star’s preliminary notices
under the Construction Lien Statute. This issue turns on the
interpretation of the statute and our caselaw, which we review for
correctness. 5
¶19 Second, Dumar argues that New Star’s lien was invalid for
failing to delineate between work on Dumar’s units and work on
the common areas. This is also a question of statutory
interpretation, which we review for correctness. 6
¶20 Third, Dumar asserts that the district court miscalculated
the amount it owed under the lien. We review the district court’s
interpretation of the relevant statutes and the condo declaration for
correctness. 7 But we uphold the district court’s factual findings
unless they are clearly erroneous. 8
¶21 Fourth, Dumar argues that the district court erred in
rejecting its excessive lien claim. Whether New Star’s lien was
excessive under the statute is a legal question, which we review for
correctness. 9
¶22 Finally, Dumar challenges the district court’s award of
attorney fees to New Star. We review attorney fee awards for
“patent error or clear abuse of discretion.” 10
ANALYSIS
¶23 Construction liens allow contractors, construction
workers, and other laborers to ensure payment for their labor and
__________________________________________________________
5 See Utah Dep’t of Transp. v. FPA W. Point, LLC, 2012 UT 79, ¶ 9,
304 P.3d 810.
6 See
id.
7 Id.; View Condo. Owners Ass’n v. MSICO, L.L.C.,
2005 UT 91,
¶ 17,
127 P.3d 697.
8 See Jouflas v. Fox Television Stations, Inc.,
927 P.2d 170, 174 (Utah
1996).
9 See Wittingham, LLC v. TNE Ltd. P’ship,
2024 UT 23, ¶ 30,
554
P.3d 924.
10 Laws v. Grayeyes,
2021 UT 59, ¶ 22,
498 P.3d 410 (cleaned up).
6
Cite as: 2025 UT 14
Opinion of the Court
materials by asserting a claim against the property they have
improved.11 Utah’s Construction Lien Statute “is remedial in
nature and seeks to provide protection to laborers and materialmen
who have added directly to the value of the property of another by
their materials or labor.” 12 The statute, the “result of a legislative
give-and-take that balances multiple concerns,” also aims to
“assur[e] clear notice for property owners” and to “facilitat[e]
finality in . . . real estate transactions.” 13
¶24 The Construction Lien Statute states that “a person who
provides preconstruction service or construction work on or for a
project property has a lien on the project property for the
reasonable value of the . . . construction work . . . , as provided in
[the Construction Lien Statute].” 14 To preserve their rights to assert
a construction lien, contractors must first “file a preliminary notice
with the [state construction] registry no later than 20 days after the
day” they start construction work. 15 Once the work is complete, a
contractor who has gone unpaid may “claim [the] construction
lien” by submitting “a notice of construction lien” to the county
recorder within the statutory timeframe.16 The contractor may then
sue to enforce the lien, “caus[ing] the property to be sold” to pay
off the lien. 17
¶25 Here, the district court held that New Star had a valid
construction lien totaling about $1.2 million “against units 1–12 of
__________________________________________________________
11 See 56 C.J.S. Mechanics’ Liens § 1 (Dec. 2024 update); see also
Projects Unlimited, Inc. v. Copper State Thrift & Loan Co., 798 P.2d 738,
743 (Utah 1990).
12 Projects Unlimited,
798 P.2d at 743 (cleaned up).
13 VCS, Inc. v. Utah Cmty. Bank,
2012 UT 89, ¶ 20,
293 P.3d 290
(cleaned up).
14 UTAH CODE § 38-1a-301(1). The statute includes an exception
for qualifying owner-occupied residences, not disputed here. See id.
(establishing lien rights “[e]xcept as provided in Section
38-11-107”).
15 Id. § 38-1a-501(1)(a).
16 Id. § 38-1a-502(1)(a).
17 Id. § 38-1a-704(1); see also id. § 38-1a-701. The owner has “the
same right of redemption” as in other foreclosure actions. Id.
§ 38-1a-704(1).
7
NEW STAR v. DUMAR
Opinion of the Court
Building C” and concluded that the lien “may be foreclosed.” On
appeal, Dumar argues that the lien was invalid for three reasons:
(1) New Star’s first preliminary notices, filed before New Star
began sitework, were too broad to support New Star’s lien against
Building C; (2) New Star’s second preliminary notices were
inadequate because they failed to identify Dumar’s units by the
correct parcel numbers; and (3) even if one or both sets of
preliminary notices were valid, New Star failed to allocate costs
between work performed on Dumar’s units and work performed
on the common areas. In addition to attacking the lien itself, Dumar
argues the district court miscalculated the amount it owed under
the lien. Dumar then turns to its counterclaim, asserting the district
court erred in rejecting its excessive lien claim. And finally, Dumar
challenges the district court’s attorney fee award.
¶26 We look first to New Star’s second preliminary notices—
the ones specific to Building C—and conclude that those notices
substantially complied with the Construction Lien Statute and
could support New Star’s lien against the units in Building C. We
therefore decline to consider whether New Star’s first preliminary
notices were adequate. Second, we conclude that New Star’s failure
to allocate expenses between the units and the common areas of
Building C did not invalidate the lien. Third, we hold that the
district court incorrectly calculated the amount of the lien by
treating Dumar as owning all the common areas of Building C,
rather than only 12/108, or 1/9, of the common areas of the
development, as listed in the condo declaration. We remand for the
court to determine the correct amount owed under the lien. Fourth,
having concluded that the district court miscalculated the amount
Dumar owed under the lien in the first instance, we remand for the
court to reconsider Dumar’s excessive lien claim. Fifth, we direct
the district court to reconsider its attorney fee award.
I. NEW STAR’S SECOND PRELIMINARY NOTICES WERE VALID
¶27 We begin with Dumar’s claim that New Star’s preliminary
notices were inadequate to support its construction lien against the
units in Building C. Utah Code section 38-1a-501(1)(a) lays out the
preliminary notice requirements for a construction lien: “A person
who desires to claim a construction lien on real property shall file
a preliminary notice with the [state construction] registry no later
than 20 days after the day on which the person commences
providing construction work on the real property.” Contractors
who do not “file a preliminary notice as required . . . may not claim
8
Cite as: 2025 UT 14
Opinion of the Court
a construction lien.” 18 In a suit to enforce a construction lien, “the
burden is upon the person filing the preliminary notice to prove
that the person has substantially complied with” the preliminary
notice requirements. 19
¶28 In this case, New Star contracted in 2017 to construct the
entire Sage Creek development, including 108 condo units. In
January 2018, New Star filed the first preliminary notices, which
described “108 NEW CONDO UNITS,” identified the property
owner as Sage Creek, and identified the property by three tax
parcel numbers (parent parcels) that covered the entire
development area. In November, Sage Creek recorded the condo
declaration, establishing new parcel numbers for each unit in the
development (child parcels).
¶29 The next month, Sage Creek and New Star signed a new
agreement that detailed the cost and planned construction of
Building C. Then New Star filed the second preliminary notices for
“SAGE CREEK AT MOAB, BLDG C.” Those notices listed the same
three parent parcel numbers as the first preliminary notices, not the
child parcel numbers for each unit in Building C.
¶30 At issue is whether either set of notices was sufficient to
support New Star’s lien against the units in Building C. The
Construction Lien Statute states that “a preliminary notice is
effective as to all construction work that the person filing the notice
provides to the construction project under a single original
contract.” 20 An “[o]riginal contract” is “a contract between an
owner and an original contractor for preconstruction service or
construction work.” 21 And a “[c]onstruction project” is “an
improvement that is constructed pursuant to an original
contract.” 22 Relying on these definitions, Dumar asserts that the
__________________________________________________________
18 UTAH CODE § 38-1a-501(1)(e).
19 Id. § 38-1a-501(2)(a). The statute also provides two safe
harbors for proving substantial compliance. See id.
§ 38-1a-501(2)(b)–(c); see also infra ¶¶ 34–36.
20 UTAH CODE § 38-1a-501(1)(b).
21 Id. § 38-1a-102(24)(a). The statutory definition excludes
contracts between owner-builders and other individuals. Id.
§ 38-1a-102(24)(b).
22 Id. § 38-1a-102(10).
9
NEW STAR v. DUMAR
Opinion of the Court
first preliminary notices could not support New Star’s lien against
the units in Building C because Building C was its own
“improvement” and was constructed under a separate “original
contract” from the first sitework contract. It then asserts that the
second preliminary notices were inadequate because they listed
only the parent parcel numbers, rather than the child parcel
numbers established when the condo declaration was recorded.
¶31 The district court held that the first preliminary notices
were sufficient to cover the entire development, finding that the
first preliminary notices “plainly identified the entire Sage Creek
development and all 108 units that were anticipated.” The court
noted that New Star and Sage Creek “had contracted for the project
construction before those preliminary notices” were filed.
“Sitework and construction began and, when it was time for
Building C construction, an amended contract was signed specific
to Building C.” The court found that the construction of Building C
“was not a separate construction project. Instead, it was just one
phase of a single ongoing condominium development . . . .” It
therefore declined to look at the second preliminary notices,
finding them unnecessary to its legal analysis.
¶32 Because we conclude that New Star’s second preliminary
notices—specific to Building C—substantially complied with the
statute, we need not decide whether to adopt Dumar’s
interpretation of “original contract” and “construction project” in
the statute. We also decline to separately address the adequacy of
New Star’s first preliminary notices.
¶33 We begin by reviewing our caselaw to clarify the
framework for evaluating substantial compliance under the
Construction Lien Statute. We then apply that framework and
determine that New Star’s second preliminary notices substantially
complied with the preliminary notice requirements, sufficient to
support New Star’s lien.
A. A Contractor Substantially Complies if Its Failure to
Comply with a Statutory Requirement Does Not Cause
Actual Harm or Create the Potential for Harm
¶34 The Construction Lien Statute states that “[e]xcept as
provided in Subsection (2)(b), the burden is upon the person filing
the preliminary notice to prove that the person has substantially
10
Cite as: 2025 UT 14
Opinion of the Court
complied with the requirements of this section.” 23 Subsection (2)(b)
explains that a person may substantially comply with the
preliminary notice requirements if they file “a preliminary notice
that links, within the registry, to a preliminary notice filed by an
original contractor for the same construction project.” 24 Subsection
(2)(c) then provides that substantial compliance with certain
requirements “may be established by a person’s reasonable
reliance” on information from earlier-filed construction loan
notices, preliminary notices, or building permits. 25
¶35 While the parties agree that subsections (2)(b) and (2)(c) do
not apply to these facts, they dispute the significance of the
provisions to New Star’s lien claim. Dumar asserts that these two
provisions lay out the only ways to substantially comply with the
preliminary notice requirement. New Star, on the other hand,
argues that (2)(b) and (2)(c) are safe harbors and do not define the
full scope of substantial compliance.
¶36 We agree with New Star. The plain meaning of “except” in
(2)(a) is “with the exclusion or exception of.” 26 Subsection (2)(a)
thus states that, excluding the circumstances listed in subsection
(2)(b), the contractor filing the preliminary notice bears the burden
to prove substantial compliance. 27 So under (2)(a), a contractor may
substantially comply without satisfying (2)(b). Similarly,
subsection (2)(c) states that substantial compliance “may be
established” by following that provision. 28 But the permissive
language suggests that other methods of proving substantial
compliance are possible. 29 Subsection (2)(a)’s general rule loses its
meaning if (2)(b) and (2)(c) are the only ways to substantially
comply. Instead, as New Star suggests, (2)(b) and (2)(c) are safe
__________________________________________________________
23 Id. § 38-1a-501(2)(a).
24 Id. § 38-1a-501(2)(b).
25 Id. § 38-1a-501(2)(c).
26Except, MERRIAM-WEBSTER, https://www.merriam-webster.com/dictionary/except (last visited Apr. 28, 2025).
27 See UTAH CODE § 38-1a-501(2)(a).
28 See id. § 38-1a-501(2)(c).
29 See id.
11
NEW STAR v. DUMAR
Opinion of the Court
harbors, providing a presumption of compliance in some cases, but
not defining all possible avenues for substantial compliance.
¶37 Setting aside the safe harbor provisions, the parties next
dispute the meaning of substantial compliance. This court has held
that substantial compliance “is measured by its potential for harm
or prejudice. A defect in compliance may be excused as
insubstantial if it cannot have any meaningful impact on other
parties.” 30 New Star asserts that the court should evaluate only
whether a party’s failure caused actual harm. Dumar argues that a
party has not substantially complied if its statutory failure caused
even the potential for harm.
¶38 Admittedly, our caselaw is somewhat ambiguous about
how to measure substantial compliance. In Projects Unlimited, Inc.
v. Copper State Thrift & Loan Co., we leaned heavily on the purpose
of the Construction Lien Statute, emphasizing the “modern trend
. . . to dispense with arbitrary rules [that] have no demonstrable
value in a particular fact situation” and emphasizing the right of
laborers to be paid.31 We applied a fact-specific analysis that would
uphold the lien unless the contractor’s “alleged failures ha[d]
compromised a purpose of the [construction] lien statute,” or
caused actual prejudice to the parties. 32
¶39 In VCS, Inc. v. Utah Community Bank, we emphasized that
the Construction Lien Statute embodies the legislature’s efforts to
balance competing priorities, including the desire that laborers be
paid for their work and the importance of notice and finality. 33 We
noted that “[c]ompliance with a few—or even many—provisions of
a detailed statutory scheme is not the measure of substantial
compliance. And just because a statute is detailed does not
automatically transform its individual requirements into
immaterial technicalities.” 34 We then said that “[o]ur cases refuse
__________________________________________________________
30 VCS, Inc. v. Utah Cmty. Bank, 2012 UT 89, ¶ 37,
293 P.3d 290.
31
798 P.2d 738, 743–44 (Utah 1990) (cleaned up); see also
id. at 744
(A construction lien “should not be defeated by technicalities, when
no rights of others are infringed, and no express command of the
statute is disregarded.” (cleaned up)).
32
Id. at 744.
33
2012 UT 89, ¶ 20.
34 Id. ¶ 36.
12
Cite as: 2025 UT 14
Opinion of the Court
to condone the failure to comply with an express command of the
statute, at least in circumstances where the act of noncompliance is
material rather than harmless.” 35
¶40 In applying the substantial compliance standard to the
facts in VCS, we first evaluated whether a contractor’s error
violated “an express statutory command.” 36 Finding that it did, we
then considered the purpose of the statutory requirement and
whether the failure to satisfy it “implicat[ed] a potential for
prejudice or harm.” 37 Finally, in assessing whether the failure was
harmless, we considered whether the contractor had taken any
steps to mitigate the potential harm and “adequately fulfill[] th[e]
function of the [statutory] requirement.”38
¶41 Weaving together our caselaw, we hold that a court must
first evaluate whether a contractor failed to comply with a
provision of the Construction Lien Statute. If the court determines
the contractor failed to comply with a statutory requirement, the
court must then analyze the harmfulness of that failure. If the
failure caused actual harm, then the contractor did not
substantially comply, and the analysis ends there. 39 In the absence
of actual harm, the court must determine the purpose of the
statutory requirement. 40 The court must then assess whether, in
light of that purpose and all of the surrounding facts, the failure
created the potential for harm. 41 If the failure neither caused actual
harm nor created the potential for harm, the court must find
substantial compliance. We next apply that substantial compliance
framework to New Star’s second preliminary notices.
B. New Star’s Second Preliminary Notices Substantially
Complied with the Construction Lien Statute
¶42 We begin by reviewing the preliminary notice section of
the Construction Lien Statute to determine whether New Star failed
__________________________________________________________
35 Id. (cleaned up).
36 Id. ¶ 39.
37 Id.
38 Id.
39 See Projects Unlimited,
798 P.2d at 744 & n.5.
40 See VCS,
2012 UT 89, ¶¶ 36–39.
41 See
id. ¶¶ 37–39.
13
NEW STAR v. DUMAR
Opinion of the Court
to comply with any of its provisions. Under Utah Code
section 38-1a-501(1)(h), a contractor “shall include” several
elements in a preliminary notice, such as the contractor’s name and
contact information, the name and address of the person who
contracted for the work, information about the property owner,
and details about the property. The preliminary notice must also
include “one of four listed means of identifying the specific piece
of real property to which the eventual lien will attach.” 42 One
option is to identify the property by “the tax parcel identification
number of each parcel included in the project property.”43
¶43 When Sage Creek first contracted with New Star, the
development spanned three parent parcels, each with their own
parcel numbers. In November 2018, when construction was well
underway, Sage Creek recorded the condo declaration, establishing
new child parcel numbers for each unit in the development. The
next month, New Star filed the second preliminary notices for
Building C, listing the three parent parcel numbers, but not the new
child parcel numbers.
¶44 Dumar asserts that New Star’s second preliminary notices
failed to properly identify the property that would be covered by
the lien because New Star listed the three parent parcel numbers
instead of the child parcel numbers for each unit. Dumar points to
Utah Code section 57-8-19(1), found in the Condominium
Ownership Act, 44 which states that “[s]ubsequent to recording the
[condo] declaration . . . and while the property remains subject to
[the Condominium Ownership Act], no lien shall thereafter arise or
be effective against the property.” Rather, once the declaration is
recorded, “liens or encumbrances shall arise or be created only
against each unit and the percentage of undivided interest in the
common areas and facilities appurtenant to such unit.” 45 Based on
this statute, Dumar argues that once the condo declaration created
the child parcels, no lien could attach to the parent parcels.
Preliminary notices listing the parent parcels would also be invalid.
__________________________________________________________
42 Zion Vill. Resort LLC v. Pro Curb U.S.A. LLC, 2020 UT App 167,
¶ 3,
480 P.3d 1055; see also UTAH CODE § 38-1a-501(1)(h)(vii).
43 UTAH CODE § 38-1a-501(1)(h)(vii)(A).
44 Id. §§ 57-8-1 to -60.
45 Id. § 57-8-19(1).
14
Cite as: 2025 UT 14
Opinion of the Court
¶45 We agree with Dumar that after the declaration had been
recorded, a subsequent lien could attach only to individual condo
units and the associated undivided interest in the common areas.
Because the declaration established new tax parcel numbers for
each unit before New Star filed the second preliminary notices, the
notices should have included the child parcel numbers, consistent
with the statutory requirement to list the parcel number “of each
parcel included in the project property.”46 New Star’s second
preliminary notices therefore did not comply with the Construction
Lien Statute.
¶46 The next step of the substantial compliance framework
considers whether the failure to comply with the statute led to
actual harm. Dumar conceded at oral argument that it suffered no
actual harm from New Star’s failure to include the child parcel
numbers.
¶47 We next consider the purpose of the statutory requirement
and whether, in light of that purpose, New Star’s error created the
potential for harm. 47 Before considering the purpose of
preliminary notices here, we look to our caselaw to better
understand that standard. In Projects Unlimited, we determined
that the contractor substantially complied with the verification
requirements of the Construction Lien Statute even though the
notary “omitted her address and the expiration date of her
commission.” 48 We held that even assuming those details were
required by the statute, an interested party “could certainly
confirm [the notarization’s] authenticity with the simplest
inquiry,” and thus there was no possible harm from the failure.49
But in VCS we concluded that a contractor who filed a lis pendens
more than 450 days after the deadline did not substantially comply
with the statute. 50 The contractor did not “point to any action it
took that adequately fulfilled [the notice] function of the lis
__________________________________________________________
46 Id. § 38-1a-501(1)(h)(vii)(A).
47 See VCS,
2012 UT 89, ¶¶ 37–39.
48 Projects Unlimited, 798 P.2d at 745–46.
49 See
id.
50 VCS,
2012 UT 89, ¶¶ 8, 39.
15
NEW STAR v. DUMAR
Opinion of the Court
pendens requirement,” and the potential for harm was too high to
ignore that failure. 51
¶48 We now review the purpose of preliminary notices.
Preliminary notices ensure that property owners and interested
parties have clear notice of a contractor’s claim for payment early
in the construction process, so that they can act in an informed way
while the construction is ongoing. This early, explicit notice
prevents surprise, reduces future conflicts, and reduces the burden
on owners seeking to transfer their property. 52 Requiring a
preliminary notice to include tax parcel numbers for each parcel to
which a lien may eventually attach ensures that a preliminary
notice is visible in a reasonable search of the state construction
registry. Absent a clear way to identify the property subject to a
future construction lien, property owners and other third parties
may lack notice of the potential lien and the associated risk of
foreclosure.
¶49 Given the underlying purpose of providing notice, an
error in a preliminary notice that prevented interested parties from
finding the notice in a search might create the potential for harm.
But where the state construction registry contains several
searchable fields, not every error in every field of the preliminary
notice will create the potential for harm. A speculative claim that
some interested party could fail to find the preliminary notices in a
registry search based on an error is insufficient. In Arnold Industries,
Inc. v. Love, we considered whether a reasonably diligent search
would have discovered a public record despite an indexing error.53
We adopt that same standard in the analogous context of a
preliminary notice search.
__________________________________________________________
51 Id. ¶ 39 (cleaned up).
52 Cf. id. (reasoning that the lis pendens requirement “puts the
world on notice that an action has been commenced to foreclose a
[construction] lien . . . [,] thereby promot[ing] clear notice, finality,
and the alienability of real property”).
53 2002 UT 133, ¶¶ 31–35,
63 P.3d 721 (finding a property subject
to an easement despite an indexing error when the owner could
observe the use of the right-of-way and thus had constructive
notice to conduct “an investigation of reasonable diligence within
the public record” to gain actual notice of the easement).
16
Cite as: 2025 UT 14
Opinion of the Court
¶50 A reasonably diligent search of the registry would have
returned the preliminary notices here. The Construction Lien
Statute generally requires a contractor to “give only one
[preliminary] notice for each construction project.” 54 And though a
contractor must file a preliminary notice by the statutory
deadline—usually 20 days after construction work begins 55—there
appears to be no way for a contractor to file a preliminary notice
too soon.56 Accordingly, a contractor could file preliminary notices
for each building in an entire development very early in the
process, before any condo declaration established child parcels.
Assuming the early-filed preliminary notices met all of the other
statutory requirements, the contractor would have no obligation to
file new notices once the child parcel numbers were created. 57 Thus,
in any given case, the presence or absence of the unit-specific child
parcel numbers on a preliminary notice is merely a quirk of timing.
And therefore any reasonably diligent searcher would not rely on
the child parcel numbers alone but would search in other ways—
by property owner, address, some other identifier in the registry,
or by resorting to the county title records to discover the parent
parcel numbers for a further search. 58
¶51 In that context, a reasonably diligent search would turn up
New Star’s second preliminary notices. The notices listed the
parent parcel numbers, the development’s address, the developer’s
name, and the contractor’s name. The notices specifically identified
Building C. So even absent the child parcel numbers, a person
performing a reasonably diligent search would discover the
__________________________________________________________
54 UTAH CODE § 38-1a-501(3)(a).
55 Id. § 38-1a-501(1)(a), (c).
56 See id. § 38-1a-501.
57 See id. § 38-1a-501(3)(a). As noted above, Dumar argues that
such a contractor would need to file new preliminary notices for
each “construction project” under each “original contract.” See
supra ¶¶ 30–32. We need not address those arguments to resolve
this case, and we assume here that our hypothetical contractor filed
an appropriate number of notices to satisfy the statutory
requirements.
58 See generally UTAH CODE § 38-1a-201(2) (noting the various
ways that the “designated agent shall index filings in the registry,”
including address, owner, and tax parcel number).
17
NEW STAR v. DUMAR
Opinion of the Court
preliminary notices and understand that New Star sought to be
paid for its work constructing the units in Building C. Thus the
failure to include the child parcel numbers on the notices did not
create the potential for harm. Because New Star’s second
preliminary notices substantially complied with the statute, we
reject Dumar’s attempt to invalidate the lien on that basis.
II. THE FAILURE TO SEGREGATE UNIT AND COMMON-AREA EXPENSES
DOES NOT INVALIDATE THE LIEN
¶52 Dumar next asserts that New Star’s lien was invalid
because its notice of construction lien failed to separately identify
the value of the work performed on the condo units and the
common areas. If a contractor asserts a “construction lien against
two or more improvements owned by the same person, the
[contractor] shall designate the amount claimed to be due on each
of the improvements.” 59 And a separate provision in the
Condominium Ownership Act provides that “liens or
encumbrances” against condos “shall arise or be created only
against each unit and the percentage of undivided interest in the
common areas and facilities appurtenant to such unit in the same
manner” as liens against other types of property.60 Dumar asserts
that this second provision means that units and common areas are
separate “improvements” against which the contractor must
separately “designate the amount claimed to be due.” 61 We
disagree.
¶53 The Condominium Ownership Act requires that liens
against condos be specified against each unit—rather than against
a whole building or development.62 It is less clear, however, that
“unit[s]” and “the percentage of undivided interest in the common
areas” are two separate improvements against which liens may be
levied. 63 Rather, the statute requires that liens be attached only to
__________________________________________________________
59 UTAH CODE § 38-1a-304(2).
60 Id. § 57-8-19(1).
61 See id. § 38-1a-304(2).
62 See id. § 57-8-19(1).
63 See id.; see also id. § 38-1a-102(21) (defining “[i]mprovement”
as “a building, infrastructure, utility, or other human-made
structure or object constructed on or for and affixed to real
(continued . . .)
18
Cite as: 2025 UT 14
Opinion of the Court
individual units together with their associated interests in the
common areas. Under this reading, New Star’s notice of
construction lien needed to designate the amount claimed against
each unit, including any amount attributable to work on the
common areas, but the lien did not need to separate out the
expenses for the common areas and the costs of constructing the
units themselves. New Star’s notice of construction lien did list the
amount each unit owed under the lien. We therefore reject Dumar’s
claim that the lien should be invalidated for the failure to allocate.
III. THE DISTRICT COURT ERRED IN ITS CALCULATION OF THE AMOUNT
OWED UNDER THE LIEN
¶54 Having concluded that New Star has a valid lien, we turn
to Dumar’s claim that the district court incorrectly calculated the
amount it owed under the lien. Dumar asks that we “remand to the
district court to determine the amount of the lien.”
¶55 The parties dispute the standard we should apply in
reviewing the district court’s factual finding about how much
Dumar owed under the lien. New Star asserts that “the calculation
of damages including overpayments and underpayments . . .
‘involves a finding of fact that we review for clear error.’” 64 Dumar
asserts that it does “not challenge the factual findings” of the
district court, but instead it “challenge[s] the [district] court’s legal
conclusion that [Dumar] w[as] responsible for paying for all of the
common area expenses in Building C,” which it argues we should
review for correctness.
¶56 So far as Dumar challenges the interpretation of the
applicable statutes and the condo declaration, we review the
__________________________________________________________
property; or . . . a repair, modification, or alteration” to one of those
items).
64 (Quoting Hale v. Big H Constr., Inc., 2012 UT App 283, ¶ 10,
288
P.3d 1046.)
19
NEW STAR v. DUMAR
Opinion of the Court
district court’s conclusions for correctness. 65 But we defer to the
district court’s factual findings unless they are clearly erroneous. 66
¶57 Dumar asserts the district court’s order required it to pay
New Star for lien costs extending beyond its ownership interest in
the development. It argues that based on the Construction Lien
Statute and condo declaration, its ownership interest extends only
to its twelve units plus each unit’s 1/108 share in the common
areas. In total, it could therefore only be responsible for the costs of
the twelve units plus 12/108, or 1/9, of the costs of constructing
Building C’s common areas. Thus, it argues, the district court erred
in finding each unit responsible for 1/12 of the costs of Building C’s
common areas, adding up to 100% of the common area
construction costs for Building C.
¶58 We begin with the statute. “The primary objective of
statutory interpretation is to ascertain the intent of the
legislature.” 67 And “the best evidence of the legislature’s intent is
the plain language of the statute itself.” 68
¶59 Utah Code section 38-1a-301(1) states that “a person who
provides . . . construction work on or for a project property has a
lien on the project property for the reasonable value of the . . .
construction work.” In the context of condos, we also consider the
Condominium Ownership Act, which provides:
In the event a lien against two or more units becomes
effective, the unit owners of the separate units may
remove their units and the percentage of undivided
interest in the common areas and facilities
appurtenant to such units from the lien by payment
of the fractional or proportional amount attributable
to each of the units affected. Such individual payment
__________________________________________________________
65 See Utah Dep’t of Transp. v. FPA W. Point, LLC, 2012 UT 79, ¶ 9,
304 P.3d 810 (reviewing a court’s statutory interpretation for
correctness); View Condominium Owners Ass’n v. MSICO, L.L.C.,
2005 UT 91, ¶ 17,
127 P.3d 697 (reviewing a court’s interpretation
of a condo declaration for correctness).
66 See Jouflas v. Fox Television Stations, Inc.,
927 P.2d 170, 174 (Utah
1996).
67 Bagley v. Bagley,
2016 UT 48, ¶ 10,
387 P.3d 1000 (cleaned up).
68
Id. (cleaned up).
20
Cite as: 2025 UT 14
Opinion of the Court
shall be computed by reference to the percentages
appearing in the declaration. Subsequent to any
payment, discharge or other satisfaction, the unit and
the percentage of undivided interest in the common
areas and facilities appurtenant thereto shall be free
and clear of the lien so paid, satisfied or discharged.
Partial payment, satisfaction or discharge shall not
prevent the lienor from proceeding to enforce the
lienor’s rights against any unit and the percentage of
undivided interest in the common areas and facilities
appurtenant thereto not so paid, satisfied or
discharged. 69
Under the plain language of the Condominium Ownership Act,
payment owed to satisfy a lien “shall be computed by reference to
the percentages appearing in the declaration.” 70 And according to
the declaration, each of Dumar’s twelve units owns a 1/108 interest
in the development, for a total ownership of 1/9 of the common
areas of the development. The district court therefore erred in
finding Dumar responsible for all of the common areas of Building
C, a scope broader than Dumar’s ownership interest.
¶60 New Star argues that this reading of the two statutes—
limiting unit owners’ liability under a lien to their proportional
interest in the development—would mean that in some cases a
contractor could foreclose only on a unit’s interest in the common
areas of a development, making liens an ineffective remedy. But
our reading does not compel that result. Rather, a unit owner’s
proportional interest in the common areas of the development—as
described in the declaration—will generally be tied to ownership
of a unit. 71 Thus, though Dumar may own an interest in the
common areas of Building D, for instance, New Star’s remedy to
__________________________________________________________
69 UTAH CODE § 57-8-19(2).
70 Id.
71 See, e.g., id. (stating that payment of the full lien amount leaves
“the unit and the percentage of undivided interest in the common
areas and facilities appurtenant thereto . . . free and clear of the
lien” while partial payment does not bar the lienor from enforcing
the lien through foreclosure “against any unit and the percentage
of undivided interest in the common areas and facilities
appurtenant thereto”).
21
NEW STAR v. DUMAR
Opinion of the Court
recover any amount owed for Building D’s construction is to
foreclose on Dumar’s units in Building C. So long as a contractor
follows the statutory requirements to provide notice to all units
against which a lien may attach of the contractor’s intention to
recover for work performed, the construction lien provides a
remedy to ensure payment of all expenses, across an entire
development.
¶61 Though we hold that New Star may not force Dumar to
pay for Building C’s construction costs beyond its ownership
interest in the building, both parties seem to agree that Dumar’s
interest in the common areas of the development extends beyond
Building C, and thus that Dumar should be responsible for paying
1/9 of the common area costs of the other buildings. 72 The record
and briefing leave ambiguous exactly how New Star was paid for
the construction of the other three buildings. But because
Broadmark’s foreclosure of its deed of trust did not affect Dumar’s
units, it cannot have extinguished New Star’s lien against Dumar’s
ownership share in the common areas of the other buildings.
¶62 To the extent that Dumar owns a share of the common
areas of the other buildings, and has not paid its portion of the costs
of construction of those buildings, any unpaid amount may persist
as a lien against its twelve units in Building C. And Dumar’s units
are not “free and clear” of New Star’s lien until it has paid that
“fractional or proportional amount attributable to” its units. 73 We
do not comment on whether New Star has met all the other
statutory requirements to enforce a lien for the expenses of the
other buildings against Dumar. Rather we leave to the district court
on remand to determine, under this correct statutory
interpretation, how much Dumar must pay to release the lien on its
twelve units.
__________________________________________________________
72 See generally 4 PATTERN DISCOVERY: PREMISES LIABILITY § 54:6
(3d ed. Aug. 2024 update) (“Where the [construction] lien arises out
of an improvement to common elements in a condominium project,
the land impressed with the lien may extend beyond the improved
property. An individual property owner’s unit may be exposed to
the construction lien proportionately with that unit owner’s
liability for common expenses.”).
73 See UTAH CODE § 57-8-19(2).
22
Cite as: 2025 UT 14
Opinion of the Court
IV. WE REMAND FOR THE DISTRICT COURT TO RECONSIDER DUMAR’S
EXCESSIVE LIEN CLAIM
¶63 We next consider Dumar’s excessive lien claim. Utah Code
section 38-1a-308 creates a cause of action against anyone who
“intentionally submits for recording a . . . notice of construction lien
against any property containing a greater demand than the sum
due” when “by submitting the notice, the person intends: (i) to
cloud the title; (ii) to exact from the owner or person liable by
means of the excessive notice . . . more than is due; or (iii) to
procure any unjustified advantage or benefit.” 74 A finding that an
individual filed an excessive lien triggers liability “to a third party
who is affected by . . . the notice of construction lien for twice the
amount by which the lien notice exceeds the amount actually due
or the actual damages incurred by the owner, original contractor,
or subcontractor, whichever is greater.” 75
¶64 Both before the district court and on appeal, Dumar
argued that New Star inappropriately applied about $475,000 of
Dumar’s payments to development costs outside of Building C.
Dumar argues that New Star funneled its payments this way
because “the rest of the [d]evelopment was subject to
[Broadmark]’s [d]eed of [t]rust, which would be senior to any lien
notice of New Star’s.” Dumar asserts that by applying its payments
this way, New Star intentionally increased the amount it could
recover in a lien against the units in Building C, which were not
subject to Broadmark’s superior lien.
¶65 As a first step, the party claiming an excessive lien must
show that “the lien contained a ‘greater demand than the sum’
actually owed.” 76 If the lien did claim more than was owed, the
court must decide whether the contractor, by filing for an excessive
amount, intended to “cloud the title; . . . exact from the owner . . .
more than [wa]s due; or . . . procure any unjustified advantage or
benefit.” 77
__________________________________________________________
74 UTAH CODE § 38-1a-308(2)–(3).
75 Id. § 38-1a-308(3)(b).
76 Hale v. Big H Constr., Inc., 2012 UT App 283, ¶ 73,
288 P.3d
1046 (quoting UTAH CODE § 38-1-25(1) (2005) (current version at
UTAH CODE § 38-1a-308(2)(a))).
77 UTAH CODE § 38-1a-308(2)(b).
23
NEW STAR v. DUMAR
Opinion of the Court
¶66 Here, the district court reasoned that New Star had no
contractual obligation to Dumar to allocate Dumar’s payments to
Building C. It therefore held that New Star’s lien claim was not
excessive. The parties dispute whether the district court’s
conclusion turned on the first or second step of the excessive lien
analysis. Under their alternative readings, the district court
reasoned either that (1) because New Star had no duty to allocate
Dumar’s payments to Building C, New Star’s lien did not claim an
amount greater than it was owed; or (2) New Star’s lack of duty to
allocate payments in a certain way supported an implicit finding
that New Star did not intend to file an excessive lien claim.
¶67 The district court’s analysis leaves ambiguous why it
dismissed Dumar’s excessive lien claim. And, given our holding
that the court miscalculated the amount owed under the lien, the
district court’s reasoning about whether New Star claimed more
than it was owed may be different on remand. We also note that,
under our analysis, Dumar’s ownership interest extended beyond
Building C, such that the allocation of Dumar’s payments to other
buildings might have been appropriate. Under the circumstances,
we remand the excessive lien claim for the district court to
determine whether New Star’s lien claimed more than Dumar
owed based on its ownership interest in the property, and, if so,
whether Dumar’s evidence established the requisite intent for the
court to impose liability under an excessive lien claim.
V. WE REMAND FOR A NEW ATTORNEY FEE AWARD
¶68 Last, we turn to Dumar’s claim that the district court erred
in awarding New Star attorney fees as the successful party in this
lien action. Subject to an exception not applicable here, “in any
action brought to enforce any lien under this chapter the successful
party shall be entitled to recover reasonable attorney fees, to be
fixed by the court, which shall be taxed as costs in the action.” 78 But
a person filing an excessive lien under Utah Code section 38-1a-308
“may not recover attorney fees under” this provision. 79
¶69 Here, the district court determined that New Star was the
prevailing party and awarded attorney fees accordingly. Because
we remand for a new determination of the amount owed under the
lien, as well as reconsideration of Dumar’s excessive lien claim, we
__________________________________________________________
78 UTAH CODE § 38-1a-707(1).
79 Id. § 38-1a-707(2).
24
Cite as: 2025 UT 14
Opinion of the Court
also vacate the district court’s attorney fee award and direct the
court to make a new determination as to the prevailing party and a
reasonable attorney fee award.
¶70 Both parties also request attorney fees on appeal. We have
“interpreted attorney fee statutes broadly so as to award attorney
fees on appeal where a statute initially authorizes them.” 80 We have
also recognized that a prevailing party who is entitled to
“reasonable attorney fees,” whether by contract or by statute, is
entitled to reasonable fees incurred on appeal. 81 We therefore
interpret the Construction Lien Statute’s attorney fee provision as
entitling the successful party to recover fees incurred on appeal.82
Accordingly, we instruct the district court on remand to include
appellate attorney fees in its ultimate fee award. In calculating such
an award, the district court may consider whether the prevailing
party “retain[ed] all of their trial victory on appeal” and adjust the
fee award so that the prevailing party “do[es] not recover fees
attributable to issues on which they did not prevail.”83
CONCLUSION
¶71 Dumar appeals the district court’s judgment that New Star
has a valid lien against its twelve condo units and its share of the
common areas of the development. We conclude that New Star’s
lien is valid, rejecting Dumar’s challenges to New Star’s
preliminary notices and New Star’s failure to allocate expenses
between the units and the common areas. But we hold that the
district court misapplied the Construction Lien Statute when it
deemed Dumar responsible for the costs of construction of all of
Building C, despite the condo declaration that allocated Dumar’s
ownership interest differently. We accordingly remand for the
district court to recalculate the amount owed under the lien, and to
reconsider Dumar’s excessive lien claim and its attorney fee award.
__________________________________________________________
80 Salmon v. Davis Cnty., 916 P.2d 890, 895 (Utah 1996).
81 See
id. at 896; Westgate Resorts, Ltd. v. Adel,
2016 UT 24, ¶¶ 31–
33,
378 P.3d 93; Valcarce v. Fitzgerald,
961 P.2d 305, 319 (Utah 1998).
82 See UTAH CODE § 38-1a-707(1); see also Zion Vill. Resort LLC v.
Pro Curb U.S.A. LLC,
2020 UT App 167, ¶ 59,
480 P.3d 1055
(granting an attorney fee award, including appellate attorney fees,
to the party prevailing in a construction lien action).
83 Valcarce,
961 P.2d at 319.
25
