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Mechanics’ Liens Rights and Obligations

Whether you are a general contractor, subcontractor, or home or business owner, you are likely at some time to be affected by a mechanics’ lien.  In Colorado, these liens are governed by statute:  Title 38, Article 22 of the Colorado Revised Statutes.

A lien is a legal claim, or security interest, on an item of property which is intended to secure the payment of a debt.  Labor- and service-providers may secure payment for the work they perform on real estate through a mechanics’ lien.  The range of people who may protect their right to payment through a mechanics’ lien is very broad:  “Every person who furnishes or supplies laborers, machinery, tools, or equipment in the prosecution of the work, and mechanics, materialmen, contractors, subcontractors, builders, and all persons of every class performing labor upon or furnishing directly to the owner or persons furnishing labor, laborers, or materials to be used [. . .], and also architects, engineers, draftsmen, and artisans who have furnished designs, plans, plats, maps, specifications, drawings, estimates of cost, surveys, or superintendence, or who have rendered other professional or skilled service, or bestowed labor in whole or in part, describing or illustrating, or superintending such structure, or work done or to be done, or any part connected therewith.”  C.R.S. 38-22-101(1)

There is, however, a statutorily prescribed process for securing this interest.  Within four months after “the day on which the last labor is performed or the last laborers or materials are furnished,” the lien claimant must record with the appropriate county a statement containing the name of the property owner, the name of the lien claimant, a description of the property, and amount due to the claimant.  And at least ten days before recording such statement, the claimant must serve a notice of intent to file a lien statement upon the owner of the property and the principle contractor on the project.

During that four month period, a lien claimant may record a notice with the county clerk and recorder that the claimant may file a lien statement.  This notice extends the time for filing a lien statement to the lesser of four months following completion of the improvements or six months following recording the notice.  Subsequent notices may be filed thereafter, if the improvements remain uncompleted, which notices will also extend the time for filing by six months.

Within six months following the last work or labor performed or supplied, unless extended by notice, the lien claimant must commence a foreclosure action.  The lien claimant should take care that the lien is not for an amount greater than is due, though, as such claimant could be liable “to the person against whom the lien was filed in an amount equal to the costs and all attorney’s fees.” C.R.S. 38-22-128.

There are, of course, exceptions and amendments to the above, depending on the specific circumstances of the project and lien claimant.  There may be defenses to the lien, the lien may not be valid against a government entity, and there may be a bond against which claims can be made in lieu of filing a lien.

With all of the variety and complexity involved, you should contact the professionals at Coaty and Woods, P.C. for advice on your mechanics’ lien issue today.