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Colorado’s Best Mechanics’ Lien Law Firm

WE COMBINE LEGAL KNOWLEDGE AND STRATEGY TO RECOVER UNPAID INVOICES

Expert Colorado Mechanics’ Lien Attorneys

We are the leading law firm in Colorado for mechanics’ lien law. When you are searching for a lawyer specializing in mechanics’ liens in Denver and Colorado Springs, you will find several legal groups claiming to be lien experts. Very few of them actually devote significant time to learning the craft.

Our goal in creating this website is to provide you with a comprehensive understanding of the elements and steps to a successful mechanics’ lien claim. There are some strict requirements that have to be complied with. You risk losing your right to a mechanics’ lien if you miss something or make a mistake.

Our goal is to make the content enjoyable and show you how to recover on unpaid projects, ultimately increasing your bottom line.

If you would like our help in pursuing a mechanics’ lien claim or have questions not answered in this video series, give us a call at 719-300-1300. We are the leading attorneys in Colorado for mechanics’ liens and we know how to get you paid!

Why Pursue a Mechanics’ Lien in Colorado?

When you don’t get paid on a job, you will typically have two options available to you. You can pursue a standard breach of contract claim or you can put a lien on the property. Breach of contract claims will often take longer, cost more, and potentially limit the amount of money you are able to recover.

A mechanics’ lien is generally faster, more cost-effective, open up additional categories of damages, and are easier.

Mechanics’ lien have a lot of power behind them. As the holder of a valid mechanics’ lien, you can force the property into foreclosure in a relatively short amount of time to satisfy your lien.

With the exception of property owners at the brink of bankruptcy, the threat of foreclosure will push most of them to come up with the money to satisfy the lien and avoid the foreclosure.

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Who Can File a Mechanics Lien in Colorado?

Per the Colorado Statutes, any person or company that makes an improvement to a piece of property has the right to file a mechanics’ lien if they do not get paid in full for the job. We will take a look at what is meant by improvement in a subsequent section.

General contractors, subcontractors, day laborers, architects, engineers, and interior designers are all examples of persons who can file mechanics’ liens. Additionally, companies that supply materials and equipment to be used in projects also have the right to them.

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Properties Eligible for Mechanics’ Lien in Colorado

The types of property you can file a mechanics’ lien on in Colorado is fairly broad. Just about any property within Colorado can be encumbered by a lien. This includes residential properties, commercial properties, undeveloped land, and multi-family properties.

The lien will typically cover the entire property. For example, a lien will attach to a 100 acre property even when the improvement was only done to a small house on the property. The following is a portion of the statute relevant to this issue:

The lien which attaches is not limited to an estate in fee, but extends to any interest of the person that is transferable, assignable, or conveyable in the real estate at whose instance and upon which a building, structure, or improvement is erected. For the purposes of the act, such person is deemed the owner. If he owns the fee, the lien is upon the fee. If he owns a lease estate, the lien attaches to that interest.

When is comes to multi-family properties such as townhome communities, condominiums, and common areas of those properties, a mechanics’ lien can extend to several units. The Courts in Colorado have dealt with this issue previously and stated a lien can be attached to several unsold units in a new development.

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Timing Requirements for Colorado Mechanics’ Liens

he timing requirements to file a mechanics’ lien in Colorado are very strict. If you miss a deadline by even one day, you will likely have forfeited your right to the lien. In such a case, your only option will be to file a more costly breach of contract claim.

The amount of time you have to file a mechanics’ lien depends on whether you are a supplier of materials, day laborer, or contractor.

If you are a day laborer or worker by the day, you must file your lien after you last complete the work and within two months of the last completed day of work.

For material suppliers and contractors, the lien must be filed within four months of the day the last labor was performed or the last material furnished by the claimant. This four-month period will apply to the vast majority of people and companies seeking to a file a mechanics’ lien in Colorado.

The statutes and case law make clear that performing trivial work does not extend the deadline. What constitutes trivial vs substantial work is up for interpretation, so it is best to view this from the standpoint of an outsider. If you are a window installer and come back to the project a month later to install a couple window screens that were on backorder, this likely fits the definition of trivial work. When in doubt, don’t count work that as the potential to be considered trivial in nature when calculating deadlines.

Everyone except general contractors can file extensions of time to file a mechanics’ lien. This can conceivably apply to general contractors in the even that they leave a job prior to completion and a new GC comes in.

A properly filed extension extends the deadline to for filing of the mechanic’s lien statement to four months after completion of the structure or other improvement or six months after the date of filing of said notice, whichever occurs first. The notice automatically expires if the project is completed within six months of the filing of the notice. If six months has passed since filing the notice and the improvement has not yet been completed, the lien claimant “may file a new or amended notice which shall remain effective for an additional period of six months after the date of filing or four months after the date of completion of the project, whichever occurs first.

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Notice of Intent Requirement for Mechanics’ Liens

There is a common misunderstanding in Colorado that a pre-lien notice is not required in this state. Colorado does require a pre-lien notice of intent to record a mechanics’ lien. What makes Colorado different is that the notice does not need to be recorded with the applicable county’s clerk and recorder office as with most states. You still have to serve certain persons with the notice and comply with the requirements of the Statutes.

At least ten days before filing the mechanics’ lien statement, you must serve a notice of intent to file a lien statement on the property owner and general contractor. You can accomplish this via personal service and registered or certified mail.

The notice itself is essentially an identical document to the actual lien itself. It contains all of the same information.

Once eleven or more days have passed since mailing the notice, you can then record the mechanics’ lien.

Should you realize a mistake was made on the lien statement, you can file an amended or supplemental lien statement. This is common if you receive partial payment. It is common practice to file a partial release of the lien.

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Priority and Ranking of Mechanics’ Liens

When we talk about priority and ranking of mechanics’ liens, we are referring to who gets paid first in a foreclosure or bankruptcy action. Certain types of liens are ranked higher than others, so they will be paid before those holding liens of lesser rank. This comes into issue when the foreclosure action does not yield enough money to pay everyone who has a debt or lien against the property.

Mechanics’ liens that have been properly recorded ae considered effective when you began working on the construction project or first supplied materials or equipment. In the legal world, we call this relating back to a prior date. This means liens that were put on the property before you recorded your lien but after you began working will typically rank lower than your mechanics’ lien.

Mechanics’ liens in Colorado are considered super-priority liens. Here is a portion of the statute dealing with priority:

When the lien is for work done or labor or material furnished for any entire structure, erection, or improvement, such lien shall attach to such building, erection, or improvement for or upon which the work was done, or laborers or materials furnished in preference to any prior lien or encumbrance, or mortgage upon the land upon which the same is erected or put, and any person enforcing such lien may have such building, erection, or improvement sold under execution and the purchaser at any such sale may remove the same within thirty days after such sale.

Among multiple mechanics’ liens on the same property, they are ranked accordingly:

  1. Laborers by the day or piece who did not supply materials;
  2. Subcontractors and suppliers; then
  3. Principal contractors.

What to Know About Mechanics’ Lien Waivers

A lien waiver is the intentional or voluntary relinquishment of a known right. As applicable here, it is giving up your right to file and record a mechanics’ lien in Colorado. Typically they come into play when you get paid. The property owner will usually require that you grant them a lien waiver in exchange for payment.

The Colorado Supreme Court has issued the following guidance on this issue:

In the absence of language clearly indicating an intention to waive a lien it is not to be supposed that the contractor intended absolutely to relinquish his statutory right to claim one. Where the terms of the contract, or the evidence offered in support of the alleged waiver of the right to claim a lien are ambiguous the doubt must be resolved against the waiver. A mechanic’s lien may be waived by express agreement of the party in whose favor it exists.

There are a number of issues that can arise with respect to mechanics’ lien waivers and you should always consult an attorney before agreeing to one. They have major legal consequences and could mean you are not paid in full.

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Important Topics You Need to Know

Why the Amount of a Mechanics’ Lien is Important

It is very important to know that you must be accurate in stating the amount (dollar value) of your mechanics’ lien on the lien statement filed with the clerk and recorder’s office. If you overstate the amount of your lien, you risk a Judge throwing your case out. That is the last thing you want when, after all, you’re just trying to get paid for work you have performed.

When a company has supplied materials or labor for a construction project, they may claim a lien for the value of the materials or labor. The value is usually determined upfront between the parties and laid out in the contract price. The amount of a general and subcontractor’s lien will always be limited to the contract price, plus interests and possibly attorney fees and costs.

When it comes to labor, the value of such labor can include things such as pension, profit-sharing, vacation, legal services, or apprentice training benefits for the employees of any contractor if properly included in the contract upfront.

You cannot include in the lien statement for the value of work that has not yet been performed, even if you have every intention to perform that work in the future.

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How Arbitration Can Affect Mechanics’ Lien Recovery

It is common for a construction contract to have an arbitration provision. Arbitration is essentially a minified trial that takes place before one to three people, typically former attorneys and judges, who will issue a legally binding decision. If there is a requirement for arbitration in the contract, you will typically have to adhere to this clause before filing a foreclosure action.

The problem with arbitration clauses is that while the decision of the arbiters is legally binding, they cannot order the foreclosure of property, so you still will have to pursue a formal lawsuit to see that out.

Additionally, going to arbitration does not satisfy the timing requirements of the mechanics’ lien statutes. You must still file the lawsuit, for most lien claimants, within six months of recording the lien.

How Mechanics’ Lien Lawsuits Work in Colorado

A mechanics’ lien lawsuit can be a fairly straightforward process compared to a traditional contract dispute lawsuit or personal injury action. Of course, they can get complicated and messy very quickly if the property owner fights the foreclosure lawsuit.

The following is 30,000 foot view of the beginnings of a foreclosure lawsuit.

Timing Requirements

The time you have to file the lawsuit is very quick compared to most legal claims. You are required to file the lawsuit within six months of the last date that work was performed; (2) the last date that materials were furnished; or (3) the date that the building or improvement on the property was completed. The later of the three dates applies. It is the responsibility of the lien claimant to provide proof they are complying with this deadline.

Additional Notice Requirement

In addition to timely filing the lawsuit, your attorney is also required to file what is called a lis pendens. This is a formal notice to prospective purchases of the property that a lien is being asserted against the property. This must be filed regardless of whether there are people actively considering purchasing the property.

Additional Defendants Requirement

There are three types of parties to a mechanics’ lien foreclosure lawsuit. The first is those asserting a lien against the party, the property owners and others who have an interest in the property (this includes the mortgage company if applicable), and any additional parties who are personally liable for the debt.

Technically, a subcontractor who is a lien claimant must name the general contractor as a defendant. This can obviously stir up conflicts for the subcontractor who relies on the general contractor for business. As a practical rule, Courts typically do not enforce this requirement. More often than not, they will be a plaintiff in the lawsuit along side the subcontractors.

The Lawsuit Process

As a first step, the lawsuit must be filed in the county in which the subject property is located. County level courts do not have jurisdiction over real property, so the action must be filed in District Court.

You do not have the right to a jury in a foreclosure action, so the Judge will make the final call. This also applies to additional claims that may be brought, such as a breach of contract claim. The Judge will hear and decide on all claims that are alleged.

Additional Claims

It is sound strategy to bring any and all claims against the property owner in the foreclosure action. Even though forcing the sale of the property will be the end goal, any additional claims can add to the damage total and act as an insurance policy should something happen that prevents the sale of the property.

Any additional remedies that you have are not barred simply because you are proceeding with the foreclosure lawsuit.

How Mechanics’ Lien Lawsuits Work in Colorado

A mechanics’ lien lawsuit can be a fairly straightforward process compared to a traditional contract dispute lawsuit or personal injury action. Of course, they can get complicated and messy very quickly if the property owner fights the foreclosure lawsuit.

The following is 30,000 foot view of the beginnings of a foreclosure lawsuit.

Timing Requirements

The time you have to file the lawsuit is very quick compared to most legal claims. You are required to file the lawsuit within six months of the last date that work was performed; (2) the last date that materials were furnished; or (3) the date that the building or improvement on the property was completed. The later of the three dates applies. It is the responsibility of the lien claimant to provide proof they are complying with this deadline.

Additional Notice Requirement

In addition to timely filing the lawsuit, your attorney is also required to file what is called a lis pendens. This is a formal notice to prospective purchases of the property that a lien is being asserted against the property. This must be filed regardless of whether there are people actively considering purchasing the property.

Additional Defendants Requirement

There are three types of parties to a mechanics’ lien foreclosure lawsuit. The first is those asserting a lien against the party, the property owners and others who have an interest in the property (this includes the mortgage company if applicable), and any additional parties who are personally liable for the debt.

Technically, a subcontractor who is a lien claimant must name the general contractor as a defendant. This can obviously stir up conflicts for the subcontractor who relies on the general contractor for business. As a practical rule, Courts typically do not enforce this requirement. More often than not, they will be a plaintiff in the lawsuit along side the subcontractors.

The Lawsuit Process

As a first step, the lawsuit must be filed in the county in which the subject property is located. County level courts do not have jurisdiction over real property, so the action must be filed in District Court.

You do not have the right to a jury in a foreclosure action, so the Judge will make the final call. This also applies to additional claims that may be brought, such as a breach of contract claim. The Judge will hear and decide on all claims that are alleged.

Additional Claims

It is sound strategy to bring any and all claims against the property owner in the foreclosure action. Even though forcing the sale of the property will be the end goal, any additional claims can add to the damage total and act as an insurance policy should something happen that prevents the sale of the property.

Any additional remedies that you have are not barred simply because you are proceeding with the foreclosure lawsuit.