(1) A contractor that pays a material supplier, a contractor, or a subcontractor with which the contractor maintains a running account, holds multiple contracts, or owes an outstanding debt shall: (a) clearly designate the contract for which the payment is made; and (b) identify the specific items of account to which the payment applies. (2) A subcontractor or material supplier that receives a payment for materials or labor shall require the person paying to: (a) clearly designate the contract for which the payment is made; and (b) identify the specific items of account to which the payment applies. (3) In an action to enforce a lien for materials provided or labor performed by a subcontractor or material supplier, the owner may assert a defense to the lien if: (a) the owner paid the contractor for the materials and the contractor designated the payment in accordance with Subsection (1); (b) the contractor transferred the payment to the subcontractor or material supplier; and (c) the subcontractor or material supplier failed to require a designation of the account and the specific items of account when receiving the payment.
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