Over the past several years, Colorado has been one of the fastest-growing states in the nation. With its picturesque four seasons and solid economy, companies and families have been steadily relocating to our wonderful state. With the growth in population comes a surge in construction.
Unfortunately, many construction companies find themselves in a situation where they have not been paid for their work. Parties such as general contractors, subcontractors, and material suppliers have lien rights in Colorado. The use of a mechanics’ lien is an effective tool for contractors to be paid for their work. A mechanics’ lien provides the contractor with a security interest in the property.
An enforceable mechanics’ lien requires strict compliance with proper procedures and deadlines. Even the smallest of errors can void a mechanic’s lien.
STEP 1: PREPARE NOTICE OF INTENT
Any person or business intending to file a Colorado mechanic’s lien must first serve a “notice of intent” (NOI). Failure to properly serve the NOI will likely result in the mechanic’s lien being void.
The first step is to prepare the NOI. The NOI should include the following information:
- Claimants name and address
- Name and address of the property owner
- Description of the property location
- Description of the labor and/or materials provided to the project
- The unpaid balance claimed on the mechanic’s lien
- A statement of notification that unless the balance is paid, a recording of the mechanic’s lien will take place in at least ten (10) days
STEP 2: PREPARE THE COLORADO STATEMENT OF MECHANICS’ LIEN
Colorado requires specific information to be included on a Colorado Statement of Mechanic’s Lien (CSML). Colorado requires the following information to be included on the CSML:
- Name of property owner
- Name and contact information of lien claimant
- General contractors’ information (if the claimant is someone other than the general contractor)
- Property description
- The unpaid balance claimed on the mechanic’s lien
- Attached affidavit of service of the NOI
All CSML must also be signed, sworn to, and notarized. A surplus of Colorado mechanics’ lien “forms” are published on the internet. An attorney should be used to review any documents prior to filing, as submitting the wrong information or document can result in a denial of the lien.
STEP 3: SERVE THE NOTICE OF INTENT AND STATEMENT OF MECHANIC’S LIEN
The NOI and CSML must be served at least ten (10) days prior to the actual filing of the lien. Service must be completed by either personal service or by registered/certified mail with a return receipt requested. Proper service is critical because, eventually, the actual mechanic’s lien must be filed with proof of service.
Important: The NOI does not extend the mechanics’ lien deadline. This means that the deadline to file the mechanics’ lien is not satisfied by the NOI. The date the mechanics’ lien is filed (not when the NOI was served) is used for determining whether the mechanics’ lien is timely filed.
STEP 4: FILING OF THE COLORADO MECHANICS’ LIEN
The CSML, NOI, along with proof of service must all be filed with the clerk and recorder in the county for which the property is located.
Important: The deadline to file with the clerk and recorder depends on the type of work or materials furnished by the lien claimant. Individual laborers (who did not provide materials) must file their mechanic’s lien within two months from completion of their job. General contractors, subcontractors, and suppliers must file the mechanic’s lien within four months after providing the last services or materials. For a one or two-family home, the normal four-month period is shortened to two months if there is a bona fide purchaser of the property.
STEP 5 : SEND COLORADO MECHANICS’ LIEN TO PROPERTY OWNER
The attorneys at Burnham Law have found that in certain cases, sending a copy of the completed mechanics’ lien to the property owner can assist in getting their clients paid. In some cases, pressure and requests by the property owner can entice payment.
STEP 6: ENFORCE THE MECHANICS’ LIEN
A Colorado mechanics’ lien only stays effective for six months after the date the project was completed, or labor or materials were last furnished to the project. After this period, if the lien is not foreclosed upon, it will become void and unenforceable.
If a mechanics’ lien is filed prior to the completion of the project, the contractor must file an affidavit every year stating the project is not yet complete to keep the lien active.
Enforcing the lien involves filing a lawsuit and foreclosing upon the property. Claimants should consult and/or hire an experienced construction attorney to complete this task properly.
The construction law attorneys at Burnham Law represent both small and large contractors. At Burnham Law, we have filed and enforced mechanic’s liens across the state of Colorado. We stand by our construction clients to ensure their right to be paid is protected.