(1)  Where work is performed or materials or equipment are furnished for any production unit under a contract with an owner of an interest in the production unit, any interest of any other owner in the production unit shall not be subject to a lien under this chapter, if such other owner gives written notice that he will not be responsible for work performed or materials or equipment provided.

contract signature

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Terms Used In Utah Code 38-10-109

  • Contract: A legal written agreement that becomes binding when signed.
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Owner: means a person holding any operating right, working interest, or interest in the legal or equitable title, to any real property, mine, oil lease, gas lease, well, or any combination of these, unless otherwise provided in this chapter. See Utah Code 38-10-101
  • Production unit: means :
(a) the drilling unit for a well established by lawful order or rule of the Board of Oil, Gas, and Mining in which the well is located; or if not applicable, 40 acres comprising the quarter-quarter section, or equivalent legal subdivision, in which the well is located; or
(b) a mine, and if work is performed upon or materials or equipment furnished to any part of the mine from which two or more mines are worked, the production unit shall extend to the owner's interest in the mines so worked. See Utah Code 38-10-101
(2)  Written notice shall be:

(a)  in recordable form;

(b)  filed with the county recorder of the county where the production unit is located; and

(c)  filed within 10 working days after the latter of:

(i)  the owner obtaining knowledge of the performance of such work or the providing of such materials or equipment; or

(ii)  the execution by the last party of:

(A)  a farmout agreement;

(B)  a lease or sublease;

(C)  an operating agreement;

(D)  an assignment of less than 100% of the lessee’s interest or operating rights under a lease;

(E)  a sales contract; or

(F)  an option agreement.

(3)  Failure to file under this section shall not impair any other defense available to such owner.

Enacted by Chapter 170, 1987 General Session

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