WHAT IS A MECHANIC’S OR CONTRACTOR’S LIEN?
In Colorado, if a contractor, subcontractor, or other person who performs work or provides material on your property (including superintendents, designers, engineers, architects, surveyors, suppliers), and is not compensated for the work, or material, they can file a mechanic’s lien on the property. Colorado’s Mechanic’s Lien Statute allows filing liens for the “reasonable value of labor, services and materials furnished in connection with construction of improvements on real property.”
TIMING AND NOTICE REQUIREMENTS
The time limits for filing a lien claim are crucial and must be strictly complied with or the right to lien will be lost. Generally, unless the labor is by the day or piece, the lien must be filed before four months have passed from the day the last labor was performed or the last materiel furnished. However, prior to filing a mechanics lien, the claimant must provide a “notice of intent to file lien statement,” and either serve it or send it registered, or certified mail return receipt to the property owner. The Notice of Intent to lien must be provided to the homeowner at least ten day prior to the filing of the lien.
AS A HOMEOWNER, WHAT CAN YOU DO?
First, contact a knowledgeable attorney.
Second, have your attorney review the contract (assuming you have a contract with the general contractor). Does the contract have a lien waiver or lien subordination provision?
Third, if there was work performed, and it is in compliance with the contract, was the lien, and notice of intent to lien filed properly i.e. including of the name of the property owner; creditor; entity who furnished labor/materials; address of the property; amount owed; claimant signature?
Fourth, was the lien filed timely? As stated above, the time limits for filing a lien claim are crucial and must be strictly complied with.
Fifth, is the lien amount accurate or overstated? Mechanic’s Liens must reflect the actual amount due based on the contract or on the reasonable value of labor, services, and materials that were provided. Overstating a Mechanic’s Lien in Colorado has severe consequences including forfeiture of all lien rights, and liability for the owner’s attorneys’ fees.
CLAIMS AND COUNTERCLAIMS AGAINST A CONTRACTOR OR SUBCONTRACTOR
Often times contractors or subcontractors are not paid because the work they performed was either incomplete or defective. Did you have to pay a different contractor to complete and/or repair the work? If so, then you may have your own claims or counterclaims.
If the Lien has been filed correctly, and the amount is reasonable, you can discuss “bonding off the lien” with your attorney i.e. replacing the property with money in the court registry so that there is no longer a cloud on the title.
Finally, remember, once the lien issue is resolved, or the lien expires, you will need to take action to have it removed.
If you have been served with a notice of intent to lien, call a knowledgeable attorney as soon as possible. The attorneys at Frederick | Ganderton LLP can be reached at 720-588-9120.