Timing Requirements for Filing a Mechanics Lien in Colorado
It can be said there is nothing more important than the time limits to record a mechanics’ lien in Colorado. The time to file is very short and if you miss a deadline, even by a day, you likely forfeit your right to the lien. If that happens, your most realistic option at that point is to file a breach of contract lawsuit against the property owner. Business litigation is typically longer and cost more money than a mechanics’ lien foreclosure lawsuit. While we are more than capable to handle that lawsuit if needed, your better option is to pursue a mechanics’ lien action.
Time Limits Overview
The time you have to file a mechanics’ lien on the property depends on the type of work you performed. If you are a day laborer, or worker by the day as the statute puts it, then you will typically be required to record the lien within two months of completing the work. If you did not complete the work, then file it within two months of last working on the property.
For all other persons including sub-contractors, general contractors, and material suppliers, you must record the mechanics’ lien within four months of last working on the project or last supplying materials.
What to Know About Trivial Work
The statutes are very clear that trivial work does not extend the deadline for filing a mechanics’ lien in Colorado. Unfortunately, what constitutes trivial work is not defined. When the law does not provide a definition, the Courts will apply the typical and customary usage and definition of the word.
To provide an example, if you are a window installer and put in all the windows with the exception of a couple window screens, the install of the screens will likely not extend the deadline. It is better to err on the side caution when calculating these deadlines as the consequences of not complying with them is severe.
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Extensions of the Time Limit Requirements
For those who are not general contractors, there is the option to file an extension of time to file and record mechanics’ liens. If an extension is filed, it extends the deadline 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 important thing to know is that if you file an extension, you may not know when the project is completed. If you are busy working on other projects or the location is somewhere you don’t normally drive by, you will have no way of knowing if it is completed. The effect of this is that the clock starts to countdown while you are completely unaware.
You must have a way of knowing exactly when the project is completed so you don’t unknowingly fall into this timing trap.
The information on the notice of extension is the same that will be on the lien paperwork. It must include the legal description or address or such other description as will identify the real property, the name of the person with whom he has contracted, and the claimant’s name, address, and telephone number.
You may find a situation where the property owner terminates the construction contract and demand that any person who filed a notice of extension file a termination of the extension. Unless there is language in the contract allowing the owner to do this, they have no legal authority to require it.
The notice extending time to file a mechanics’ lien statement does not have to be served on the property owner or general contractor. You simply have to record it with the clerk and recorder’s office. As a practical matter, there is no downside in most situations to notify the owner of your intentions. We recommend opening the lines of communication early in effort to avoid the mechanics’ lien process. Filing the extension gives both sides more time to accomplish that.
Extending Extensions to File
You can continue to file additional extensions for as long as the project is ongoing to extend the deadline to file indefinitely. As the attorneys, we highly recommend you do not do this absent other circumstances as there is no true benefit to doing so. Your lien rights remain the same, so why delay getting paid!?
How Abandonment of a Project Affects the Time Limits
When all labor, work, services and furnishing of materials for a project stop for a period of three (3) months, then the project is considered abandoned for purposes of the mechanics lien statutes. If the project is abandoned, it has the same effect as the project being completed for purposes of the timing requirements.
When a project is abandoned, the countdown begins to file the mechanics’ lien. The four-month window begins when you stop working on the project regardless, so this primarily affects those who have filed an extension. If you file an extension to record a mechanics’ lien, then the countdown begins on the day of abandonment which is three months after all work stopped. As in normal situations, trivial work by other contractors will not extend the deadline and prevent abandonment.
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Protections for Buyers Single-Family Homes
There are additional protections for buyers of single-family homes in Colorado. The Colorado legislature refers to them as bona fide purchasers of single-family homes. In a nutshell, you must act faster in situations where the current owner is looking to sell the property if it is a single-family home.
Here is the relevant portion of the statute:
No lien, excepting those claimed by laborers or mechanics [working by the day or piece, but without furnishing material therefor, either as principal or subcontractors], filed for record more than two months after completion of the building, improvement, or structure shall encumber the interest of any bona fide purchaser for value of real property, the principal improvement upon which is a single- or double-family dwelling, unless said purchaser at the time of conveyance has actual knowledge that the amounts due and secured by such lien have not been paid, or unless such lien statement has been recorded prior to conveyance, or unless a notice as provided in section 38-22-109(10) has been filed within one month subsequent to completion or prior to conveyance, whichever is later. For the purposes of this section, the dwelling shall be deemed complete upon conveyance and occupancy if not completed before.
The takeaway from this statute is that you must either file the lien within two months after the date the property was sold, file an extension within one month of completion of the home and prior to the home being sold, or prove the new owner had actual knowledge that a contractor had not been paid.
Additionally, home buyers are protected against mechanics’ liens if the general contractor has been paid in full. In normal situations, a subcontractor may still file a mechanics’ lien if they do not get paid but the general contractor does. With the single family home sales, your only option will be to bring a fraud and breach of contract lawsuit against the contractor.
Buyers who are aware of the existence of liens, even if they don’t know the legal terminology, do not get the additional protections of this statute. Since they know they are buying a property without outstanding payments due for improvements to the property, they know exactly what they are getting into. Granted they may not understand the full legal implications of facing foreclosure on their new home over the previous owner’s failure to pay a contractor, ignorance of the law is no excuse.
Renewing a Mechanics’ Lien
A Colorado mechanics’ lien holds property for one year. If twelve months have passed, then within thirty days you must file an affidavit stating the construction project has not been completed. The affidavit will extend the lien.