The current coronavirus crisis has created unprecedented challenges for those in the construction industry. As a result, contractors, subcontractors, and suppliers must be vigilant to protect their ability to receive payment on projects where cash flow might become problematic. One such way to ensure payment is by availing oneself of the various states' mechanics' lien laws. Mechanics' lien laws vary from state to state but often have rigid requirements. Subtle differences in notice, service, and filing requirements can make or break one's ability to preserve their lien rights.
Dinsmore's construction law practice group is prepared to navigate industry members through these turbulent times. Our group members' practices span the United States, and we have an intricate understanding of the mechanics' lien laws in a variety of jurisdictions. NACM will be publishing each state covered individually.
Who Can File a Lien?
"Every person who furnishes or supplies laborers, machinery, tools, or equipment in the prosecution of the work, and mechanics, materialmen, contractors, subcontractors, builders, and all persons of every class performing labor upon or furnishing directly to the owner or persons furnishing labor, laborers, or materials to be used in construction, alteration, improvement, addition to, or repair, either in whole or in part…" C.R.S. § 38-22-101(1).
Required. Anyone wishing to preserve a lien must serve a written Notice of Intent to File a Lien Statement. C.R.S. § 38-22-109(3).
Pre-Lien Notice: To Whom Must It Be Served?
The Notice of intent to lien must be served "upon the owner or reputed owner of the property or the owner's agent and the principal or prime contractor or his or her agent." C.R.S. § 38-22-109(3).
Pre-Lien Notice: Time to Serve
Notice must be given at least 10 days before the time of filing the lien statement with the county clerk and recorder. C.R.S. § 38-22-109(3).
Time to File Lien
- Lien statements for labor and work by the day or piece, but without furnishing laborers or materials:
- All other lien claimants
Period can be extended by filing a notice of lien identifying the property by legal description, address, or other means; the name of the person with whom the claimant has contracted; and the claimant's name, address and telephone number. Filing of the notice extends the deadline to file a lien statement until four months after the completion of the structure or other improvement or six months after the date of filing the notice, whichever occurs first. C.R.S. § 38-22-109(10).
Information Required To File Lien
A lien statement must include:
1. Name of the owner or reputed owner of the property (if the name is not known to the claimant, it must include a statement stating such);
2. Names of the persons claiming the lien, who furnished laborers or materials or performed labor for which the lien is claimed, and the contractor when the lien is claimed by a subcontractor;
3. A description of the property to be charged with lien in sufficient detail to identify the property; and
4. A statement of the amount due or owing to the claimant. The lien statement must be signed and sworn to by the claimant. C.R.S. § 38-22-109(1).
When Must Lien Be Served?
The lien statement must be served with the written Notice of Intent to File a Lien Statement at least 10 days before filing the lien statement with the county clerk and recorder. C.R.S. § 38-22-109(3).
To Whom Must Lien be Served?
The lien statement must be served "upon the owner or reputed owner of the property or the owner's agent and the principal or prime contractor or his or her agent." C.R.S. § 38-22-109(3).
A lien claimant must file suit within six months after the last work or labor is performed, or laborers or materials are furnished, or after completion of the project. The claimant must also file with the county clerk and recorder a notice stating an action has been commenced. C.R.S. § 38-22-110.
A construction defect claim does not prevent the filing of any lien statement or postpone the time within a lien statement should be filed. Colorado considers abandonment of "all labor, work, services, and furnishing of laborers or materials under any unfinished contract" to be "equivalent to a completion thereof" for the purposes of filing a lien. C.R.S. § 38-22-109(7).
Reprinted with permission.
Andrew Clauss, Esq., is a partner in Denver office of Dinsmore & Shohl LLP.