Your job is not over when you finally get paid for a construction job. If you have filed a mechanics lien and recorded it in a Colorado county and subsequently get paid, you are required to file a release of the lien with the appropriate clerk and recorder’s office. The requirements of the release itself are rather straightforward, but the consequences are large if you fail to do it.
As a practical matter, the property owner will require the release of mechanics’ lien as a condition of accepting payment. You will always see this if the property owner is represented by a competent real estate attorney.
The release of lien must be filed within ten (10) days of receiving payment. If we get technical for a moment, any person who accepts payment after recording the lien or filing a foreclosure lawsuit must file “an acknowledgement of the same of record.” That is the legalese language directly from the statute and that is as technical as we need to for the moment. Just know that this is essentially the same thing as a release as that is the functional purpose of the requirement.
If you fail to release the mechanics’ lien within those ten (10) days, you become liable for ten (10) dollars per day until the proper release is filed. Additionally, the property owner can come after you for their attorney fees and costs incurred in getting you to file the release.
If you find yourself in a situation where you failed to file the release, get it done as soon as possible and provide evidence of it to the property owner. A sincere apology will go a long way as well. As you can see above, the financial penalty is rather small and rarely do property owners seek to enforce them. Case law has rarely touched on this section of the mechanics’ lien statute.