In Colorado, construction professionals who have not been paid for their service or materials can file a mechanic’s lien on the property. A lien waiver is a document in which the construction professional gives up or surrenders their right to file a mechanic’s lien. The lien waiver is usually exchanged at the time payment is made to the construction professional. The lien waivers are used to prove that certain work and/or materials have been paid on a construction project. The purpose of a lien waiver is for the party being paid to recognize they have been compensated for their work or materials such that they waive any right to lien the construction project.
In Colorado, lien waivers are commonly exchanged in construction projects. However, Colorado has not produced any state-approved forms or consistent regulation over lien waivers. This lack of oversight can create problems if the lien waivers are not carefully reviewed and organized.
For a Colorado lien waiver to be enforceable, the document should clearly state an intent to waive lien rights and include the phrase: “all debts owed to any third party by the person waiving the lien rights and relating to the goods or services covered by the waiver of lien rights have been paid or will be timely paid.”
If the worker or business has not been 100% compensated for their work or materials, they should have the lien waiver reviewed by a construction attorney. By entering a lien waiver without being fully paid, the worker or business can lose certain payment collection methods, such as a mechanic’s lien.
The construction attorneys at Burnham Law have experience in drafting and reviewing lien waivers. Our team of lawyers includes transactional lawyers and litigators. Having both viewpoints supplies our clients with advice that covers both the contents of their lien waivers and how they can play out in a lawsuit.