An Overview of Colorado Mechanic’s Lien Laws Part 1 of 2

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by Michael Selinfreund, Esq., President/General Counsel of Cherry Creek Title Services, Inc.

This article and video presentation are intended for educational purposes only and not as legal advice.  To view more educational videos like on real estate and other related subjects visit the

Cherry Creek Title Services Channel on You Tube.

 

Mechanic’s lien laws were created for the benefit and protection of those that provide labor, materials or services in order to enhance the value or condition of another’s real property.   They are a creature of statute rather than derived from the common law.  The purpose of the mechanic’s lien law is to benefit and protect those who supply labor, materials, or services which enhance the value or condition of another’s property.   Brannan Sand & Gravel v. F.D.I.C., 928 P.2d 1337 (Colo. App. 1996), aff’d, 940 P.2d 393 (Colo. 1997).   The ability to file and foreclose a mechanic’s lien exists to prevent unjust enrichment.

The first issue to consider is whether the potential lien claimant has a right to file a lien.  C.R.S. 38-22-101 provides the right to lien for 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 in construction, alteration, improvement, addition to, or repair, either in whole or in part, of any building, mill, bridge, ditch, flume, aqueduct, reservoir, tunnel, fence, railroad, wagon road, tramway, or any other structure or improvement upon land, including adjacent curb, gutter, and sidewalk, 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.

The right to file such liens has been extended to architects, engineers, draftsmen and artisans who furnish designs, plans, plats, maps, specifications, drawings, estimates of cost, and surveys, but it has not been extended to attorneys providing legal work relating to the property.  See Laurence J. Rich & Assocs. V. First Interstate Mortgage Co. of Colorado., 807 P.2d 1199 (Colo. App. 1990).

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CLICK HERE TO VIEW VIDEO PRESENTATION ON LIEN PRIORITY ISSUES IN COLORADO

The second part of determining whether the claimant has a right to file such a lien involves verifying that that the time period for recording the lien statement has not passed.  C.R.S. 38-22-109 (4) provides that all such lien statements claimed for labor and work by the day or piece, but without furnishing laborers or materials therefor, must be filed for record after the last labor for which the lien claimed has been performed and at any time before the expiration of two months next after the completion of the building, structure, or other improvement.  And except as provided in subsections (10) and (11) of C.R.S. 38-22-109 which allows for the extension of time periods upon filing an appropriate notice, the lien statements of all other lien claimants must be filed for record at any time before the expiration of four months after the day on which the last labor is performed or the last laborers or materials are furnished by such lien claimant pursuant to C.R.S. 38-22-109(5).

The next step is determining the appropriate amount of the lien.  Many unpaid contractors, subcontractors and materialmen become angry and file liens for inflated amounts; however, this is a terrible strategy.   C.R.S. 38-22-128 provides that a person who files a lien for any amount greater than is due without a reasonable possibility that the amount claimed is due and with the knowledge that the amount claimed is greater than that amount then due, and that fact is shown in a proceeding under the mechanic’s lien law, forfeits all rights to the lien, and is liable to the person against whom the lien was filed in an amount equal to the costs and all attorney fees by knowingly and intentionally claiming excess amounts.

Before recording the statement of lien, C.R.S. 38-22-109(3) requires that a notice of intent to file a lien statement is served upon the owner or reputed owner of the property or the owner’s agent and the principal or prime contractor or his or her agent at least ten days before the time of filing the lien statement with the county clerk and recorder. Such notice of intent shall be served by personal service or by registered or certified mail, return receipt requested, addressed to the last known address of such persons, and an affidavit of such service or mailing at least ten days before filing of the lien statement with the county clerk and recorder shall be filed for record with said statement and shall constitute proof of such service.

So, once the aforementioned notice of intent and ten-day period has passed, the affidavit of service and lien statement may be recorded by the lien claimant in the clerk and recorder’s office of the county in which the property is located.  The lien statement shall contain the of the owner or reputed owner of such property, or in case such name is not known to him, a statement to that effect; the name of the person claiming the lien, the name of the person who furnished the laborers or materials or performed the labor for which the lien is claimed, and the name of the contractor when the lien is claimed by a subcontractor or by the assignee of a subcontractor, or, in case the name of such contractor is not known to a lien claimant, a statement to that effect; a description of the property to be charged with the lien, sufficient to identify the same; and statement of the amount due or owing such claimant.  Such statement shall be signed and sworn to by the party, or by one of the parties, claiming such lien, or by some other person in his or their behalf, to the best knowledge, information, and belief of the affiant; and the signature of any such affiant to any such verification shall be a sufficient signing of the statement.  See C.R.S. 38-22-109.

In the absence of an agreement to the contrary, once the right to a lien is established, it accrues interest at the rate of 12% per annum.  C.R.S. 38-22-101(5).

Lien forms (which include the affidavit of service) are available from many places; however, I recommend procuring them from Bradford Publishing online at Mechanic’s Lien forms from Bradford Forms or in-person at their store located at 1743 Wazee Street, Denver, CO  80202.  Bradford has an outstanding supply of all kinds of legal forms (many specific to Colorado) plus good substantive guides and books on various legal topics written by top attorneys.  This website link takes you to a page you can purchase a number of products sold by Bradford Publishing regarding Colorado mechanics liens including a guide to Colorado mechanics lien laws; mechanics lien kits and the individual forms.

In part 2 of this article, I’ll address lien waivers; the time deadline for foreclosing liens and when they expire; priority issues; bonding around mechanic’s liens; defenses; the Mechanics Lien Trust Fund Statute; and how a bankruptcy filing affects such liens.

 

An Overview of Colorado Mechanic’s Lien Law Part 2 of 2 VIEW NOW