OPINION
Appellant Peterson Mortgage Corporation (Peterson Mortgage) appeals the entry of summary judgment in favor of appellee Butterfield Lumber, Inc. (Butterfield). Butterfield acquired a mechanics’ lien on a piece of real property in Salt Lake County. Peterson Mortgage then recorded a trust deed on the same property. Subsequently, Butterfield brought an action to foreclose its mechanics’ lien. While the lien foreclosure was pending, Peterson Mortgage foreclosed its trust deed and the subject property was ultimately sold to a third party who did not have notice of the mechanics’ lien. The trial court held that But-terfield’s mechanics’ lien attached to the proceeds of the sale to the third party. We affirm.
BACKGROUND
The parties to this appeal agree on the material facts. At 3 p.m. on January 9, 1987, Butterfield began supplying construction materials for the subject property. At 4:38 p.m. that same day, Peterson Mortgage, the construction lender, recorded a trust deed on the property. Butterfield last supplied materials for the property on April 10, 1987.
On June 18, 1987, Butterfield recorded notice with the Salt Lake County Recorder that it claimed a mechanics’ lien on the property, as required by Utah Code Ann. § 38-1-7(1) (1988). The notice was signed by Butterfield’s president, but contained no formal acknowledgment or certification.
On April 11, 1988, after being served with Butterfield’s complaint, Peterson Mortgage initiated nonjudicial foreclosure of its trust deed on the property. On August 15, 1988, while Butterfield’s judicial mechanics’ lien foreclosure action was still pending, Peterson Mortgage sold the property at a trust deed sale to its president, Leon Peterson. Leon Peterson, in January 1989, then sold the property to Peter Wright-Clark, who had no notice of Butter-field’s mechanics’ lien or the foreclosure action.
Peterson Mortgage then moved to dismiss Butterfield’s mechanics’ lien foreclosure claim, arguing that because Butter-field’s lien had not been formally acknowledged, it was invalid. This motion was denied. Butterfield then moved for summary judgment, arguing that its lien attached to the proceeds of the property’s sale to Wright-Clark. The trial court agreed with Butterfield and granted summary judgment, awarding Butterfield the value of the materials furnished, plus interest, attorney fees, and costs, to be paid by Peterson Mortgage out of the proceeds from the sale of the property to Wright-Clark.
ISSUES AND STANDARD OF REVIEW
On appeal, Peterson Mortgage first argues that the denial of its motion to dismiss was improper, because Butter-field’s failure to have its mechanics’ lien notice formally acknowledged rendered the lien invalid. This issue turns on the trial court’s interpretation of a statute, which we review without deference.
See Berube v. Fashion Centre, Ltd.,
Peterson Mortgage’s second argument is that Butterfield’s mechanics’ lien attached only to the subject real property, and not to the proceeds of Peterson Mortgage’s sale of the property. Because the parties agree on the material facts, the grant of summary judgment on this issue also turns solely on the trial court’s interpretation of statutes, and will also be reviewed without deference.
ANALYSIS
Statutory Construction
Unless the language is ambiguous, we construe statutes according to their plain meaning.
Berube,
Acknowledgment of Mechanics’ Lien
Peterson Mortgage argues that Butter-field’s mechanics’ lien was invalid because notice of the lien was recorded without a formal acknowledgment or verification. The portion of Utah’s mechanics’ lien law relevant to this argument requires that the notice of lien contain “the signature of the lien claimant or his authorized agent and an acknowledgment or certificate as required under Chapter 3, Title 57. No acknowledgment or certificate is required for any notice filed after April 29, 1985, and before April 24, 1989.” Utah Code Ann. § 38-1-7(2)(e) (Supp.1991) (emphasis added).
Because Butterfield filed notice of its lien in June 1987, under section 38-1-7(2)(e), no acknowledgment or certificate was required. Peterson Mortgage, however, argues that acknowledgment of But-terfield’s lien notice was necessary under
Attachment of Mechanics’ Lien to Proceeds of Sale
Peterson Mortgage next argues that Butterfield’s lien did not attach to the proceeds of the property’s ultimate sale to a third party without notice of Butterfield’s pending lien foreclosure. We disagree.
The parties agree that Butterfield’s notice of lien was timely recorded under Utah Code Ann. § 38-1-7 (1988 and Supp.1991). Assuming, as we have held, that the notice was valid without an acknowledgment, the parties also agree that Butterfield’s lien, because it relates back to the time when materials were first supplied to the property, had priority over Peterson Mortgage’s trust deed. Utah Code Ann. § 38-1-5 (1988). The parties also agree that Butter-field’s action to foreclose the mechanics’ lien was timely commenced and that because Peterson Mortgage and Leon Peterson had actual knowledge of the foreclosure action, the lien was valid against their interests in the property. Utah Code Ann. § 38-1-11. Finally, the parties agree that because no lis pendens was ever filed and because Wright-Clark, the ultimate purchaser of the property, had no actual notice of the lien foreclosure, Butterfield’s mechanics’ lien was void as against Wright-Clark’s title to the property. Id.
The disagreement here is over the effect of Butterfield’s failure to record a lis pen-dens upon its action to foreclose its lien against Peterson Mortgage. Peterson Mortgage argues that once the property was sold to Wright-Clark, who had no notice — either actual or by virtue of a recorded lis pendens — of the pending mechanics’ lien foreclosure, Butterfield’s lien vanished altogether. Peterson Mortgage claims support for this argument from a single sentence in Utah Code Ann. § 38-1-3 (1988), part of our mechanics’ lien law. Section 38-1-3 reads, with our emphasis:
Contractors, subcontractors, and all persons performing any services or furnishing or renting any materials or equipment used in the construction, alteration, or improvement of any building or structure or improvement to any premises in any manner ... shall have a lien upon the property upon or concerning which they have rendered service, performed labor, or furnished or rented materials or equipment for the value of the service rendered, labor performed, or materials or equipment furnished or rented by each respectively, whether at the instance of the owner or of any other person acting by his authority as agent, contractor, or otherwise. This lien shall attach only to such interest as the owner may have in the property.
According to Peterson Mortgage, the final sentence of section 38-1-3 means that once it sold the subject property, and thus no longer had an ownership interest in it, it held nothing to which Butterfield’s lien could attach. Section 38-1-3 has never been so expansively construed, however, and to do so under the facts of this case would defeat the purpose of the mechanics’ lien law.
The language in question has long been understood to mean simply that the owner of real property, within the meaning of the mechanics’ lien law, can cause only his or her particular ownership interest, or bundle of property rights, to be burdened by a mechanics’ lien. Where the owner who directs property improvement is, for example, a lessee who directs such improvement without the authority of the lessor, only
“The purpose of the Utah mechanics’ lien law is to provide protection to those who enhance the value of a property by supplying labor or materials.”
AAA Fencing Co. v. Raintree Dev. and Energy Co.,
It is true, as pointed out by Peterson Mortgage, that in order to obtain the protection afforded by the mechanics’ lien law, the lien claimant must comply with the requirements of the foreclosure action, as required by section 38-1-11, and therefore Butterfield had no lien on the property once Wright-Clark purchased it. Section 38-1-11 thereby limits the protection afforded to one who supplies labor or materials to property so as to not affect one who purchases the property without notice of actions to foreclose a lien. This limitation protects the interests of those who, like Wright-Clark, purchase property without actual knowledge of a pending lien foreclosure action.
See Projects Unlimited v. Copper State Thrift,
However, the section 38-1-11 protection of third party purchasers without notice of a mechanics’ lien foreclosure does not extend to those who acquire ownership with such notice. By the terms of section 38-1-11, the lien remains in effect “as to persons who have been made parties to the [foreclosure] action and persons having actual knowledge of the commencement of the action_”
See also Harris-Dudley Plumbing Co. v. Professional United World Travel Ass’n,
By insisting that section 38-1-3 limits attachment of a mechanics’ lien only to real property, Peterson Mortgage is seeking to create a loophole whereby in failing to protect its lien against possible third party purchasers without notice, a lienholder also loses the lien against an owner who is a notified party to an action to foreclose the lien. All such an owner needs to do is to sell the subject property to a third party without notice of the lien foreclosure, prior to the time the lien foreclosure is adjudicated, and the lien vanishes. We do not believe that the mechanics’ lien law is intended to facilitate such a disappearing act with respect to lien rights against a party with notice of a lien foreclosure action. Such an interpretation would undermine the protection of laborers and materialmen that the law seeks to provide.
Courts in other jurisdictions have held that when a valid lien attaches to property and the owner of the property then disposes of it so as to extinguish the lien on the property itself, the lien attaches to the proceeds received by the owner.
See, e.g., Farmer’s Feed & Supply Co. v. Industrial Leasing Corp.,
The common underlying feature in the cases granting a lien on the proceeds from
Therefore, we hold that under section 38-1-3, where the holder of a valid mechanics’ lien has timely begun judicial lien foreclosure proceedings, and a party holding a property interest that is subject to the lien, aware of the pending foreclosure, disposes of the property to one who takes it free of the lien, the lien attaches to the proceeds gained from the sale. Accordingly, the trial court’s summary judgment, attaching Butterfield’s lien to the proceeds of the property’s sale to Wright-Clark, was properly granted. 1
CONCLUSION
For the foregoing reasons, the judgment of the trial court is affirmed.
BILLINGS and JACKSON, JJ., concur.
Notes
. We note that, technically speaking, the judgment should perhaps have been entered against Leon Peterson, the last person to actually hold the property subject to the lien. Leon Peterson was not named as a party to Butterfield’s lien foreclosure. However, because Leon Peterson was president of Peterson Mortgage at the time of the transactions in question, we agree with Butterfield that he essentially stepped into Peterson Mortgage’s shoes with respect to the lien. Additionally, because Leon Peterson was not known to hold an interest in the property at the time Butterfield began its lien foreclosure action, it would appear that the burden would properly fall upon Peterson Mortgage to join Leon Peterson in the foreclosure action, and that, failing to do so, liability for the lien rests with Peterson Mortgage. Finally, Peterson Mortgage has not argued this point at trial nor on appeal.