TOP 5 MOST COMMON DEFENSES TO A MECHANICS’ LIEN

At Burnham Law, our construction and real estate lawyers have drafted, reviewed, interpreted, prosecuted, and defended Colorado mechanics’ liens. Our attorneys have made the following list of the top 5 most common defenses to mechanic’s liens that they have encountered or claimed.

1. Improper Notice

Colorado law provides a detailed notice procedure that must be followed prior to the filing of a lawsuit. At least 10 days prior to filing a mechanics’ lien with the clerk and recorder, the claimant must serve a Notice of Intent (“NOI”) upon the property owner. Service must be completed by personal service or through registered/certified mail with a return receipt requested.

The NOI must include:

• 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 that unless the balance is paid, the mechanic’s lien will be recorded with the local county clerk and recorder in at least 10 days

If the NOI fails to comply with all of the legal requirements, the mechanics’ lien may be found invalid.

2. Improper Amount

If a court finds that a mechanics’ lien is filed for an “excessive” amount, the lien will be found void, and the claimant will be held liable for fees and costs. A mechanics’ lien is considered “excessive” if it is filed for an 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 the amount that is due.

3. Lawsuit Filed Too Late

The lawsuit (foreclosure) action must be filed no later than six months after the last work is performed, the last materials are provided, or the project is completed. These are strict deadlines, and if not followed, render the lien invalid.

Because of such tight deadlines, many cases end in litigation where the primary issue is the timeline for when the last work was performed, the last materials were provided, or the project was completed. While these facts seem obvious, there is a grey area where an experienced attorney will understand how the law is applied to the facts.

4. Homeowner Affirmative Defense

Colorado law allows a “homeowner affirmative defense” in mechanics’ lien foreclosure cases.  The homeowner affirmative defense, if found to be valid by the court, is a defense that negates any liability to the homeowner, meaning the mechanics’ lien cannot force a foreclosure on the home.

To qualify for the homeowner affirmative defense, the homeowner must show the following:

The owner has complied and paid all amounts due under their contract to build the home; AND

1. 1. The property is an existing single-family dwelling unit;

OR

              2. The property is a residence constructed by the owner or under a contract that was entered by the owner prior to its occupancy as the owner’s primary residence.

5. Bona fide Purchaser

Colorado allows for a “bona fide purchaser defense.” This defense stops any foreclosure on a mechanics’ lien if ALL the following are shown:

• The mechanics’ lien was filed more than two months after the completion of the project
• The property is a single or double-family dwelling
• A purchaser bought the property and had no knowledge of the amounts due, nor was the lien recorded prior to the purchase or the lien the notice of intent

The real estate and construction attorneys at Burnham Law work extensively throughout the state of Colorado on mechanics’ lien cases. If you are in need of legal assistance with a mechanics’ lien, contact the attorneys at Burnham Law.