Two Colorado Construction Projects in Peril

A pair of Colorado construction projects hundreds of miles apart are coming under fire as is the case with many construction projects no matter the location. One is facing thousands of dollars in unpaid bills and is set for the courtroom, while the other recently had its noteholder withdraw foreclosure.

According to the Longmont Times-Call, there is a back-and-forth situation for the Mead Towne Center, a mixed-use facility set to open later this year. The attorney for the property owner said in the Times-Call businesses are unpaid because of shoddy work and the need to make necessary repairs, yet the parties were "more than fully paid."

Crosslands Construction Co. is owed roughly $300,000, and subcontractors D.A.S.H. Concrete and Stout Brothers are owed nearly $50,000 combined from Crosslands. "This is a fairly typical process in a construction dispute," said Crosslands' attorney in the article. "What normally happens is the owner will stop paying the general contractor who then in turn doesn't pay the subcontractor. Everybody has the right to file a mechanic's lien."

Meanwhile, in Aspen, The Aspen Club project has been at a standstill since August 2017 when subcontractors left the job due to nonpayment, states the Aspen Times. The original noteholder of the project foreclosed in November 2017 after contractual agreements were violated when millions of dollars in mechanic's liens were filed. Current noteholder GPIF Aspen Club withdrew its foreclosure earlier this month. Construction is expected to resume in April with new financing.

With all the uproar that can happen during a construction project between the owner and the general contractor or the general contractor with its subcontractors, material suppliers need to stay focused and keep their eye on the prize—getting paid for products, services and labor—as do other potential mechanic's lien claimants.

Colorado is one of the states that does not require a preliminary notice before providing labor or material; however, it is still not direct-to-lien either for private, commercial projects. Certain parties, including subcontractors and suppliers, have the option to give the owner, among other entities, a written notice that they are on the job, giving them additional protection under the law. Once the notice has been given, "it is the duty of the person who contracted with the principal contractor to withhold from such principal contractor … sufficient money due or that may become due to said principal contractor … to satisfy such claim and any lien that may be filed," states the Colorado Revised Statutes.

Before a lien can be preserved, a notice of intent to file a lien statement must be served to the owner and prime contractor at least 10 days before filing the lien statement. The lien expires four months after last furnishing. If still unpaid, claimants have six months from last furnishing or completion of the project, whichever is later, to foreclose.

-Michael Miller, managing editor

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Monday, 27 January 2020

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