Mechanic’s Liens in CO
Mechanic’s Liens in CO

Mechanic’s Liens in CO

If you are using a general contractor and other resources for a construction project of any scale you might consider drafting a mechanic’s lien.  This contract may protect you from future problems that could potentially arise.  Mechanic’s liens and other construction laws vary from state to state, so make sure you are knowledgeable of Colorado’s laws before drafting contracts.  Read the article below for more information.


Colorado Mechanics Lien Law: 5 Things to Know

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1) Notice of Intent to Lien is Mandatory Prior to Filing a Colorado Mechanics Lien

Colorado does not require any notice prior to performing work on the project. However, any party other than the prime contractor is allowed to file a Notice to Owner that has the effect of requiring the owner to withhold funds to ensure payment of the notifying party.

However, a Colorado mechanic’s lien claimant is required to give the property owner, reputed owner, or owner’s agent, a Notice of Intent to Lien (as well as a copy of the Statement of Lien that will be filed) at least 10 full days prior to the filing of the Colorado mechanics lien.

2) Deadline to File a Colorado Mechanics Lien Depends on Whether Materials Were Furnished

The deadline to file a Colorado mechanic’s lien is dependent upon the role of the lien claimant. The deadlines to file a lien are as follows:

For all lien claimants except laborers who don’t provide any materials to the project, Colorado law requires that a Statement of Lien must be filed by no later than 4 months after the last day labor or materials were provided to the project — punch list items and remedial work do not count to extend the time period.
For laborers who did not provide materials to the project, the lien must be filed after the last labor was performed and within 2 months of that date.
For a one or two family home, the normal 4-month period in which a mechanic’s lien may be filed is shortened to 2 months if there is a bona fide purchaser of the dwelling.
The time to file a lien may be extended if a Notice of Extension of Time to File Lien is filed with the county clerk and Recorded of the county where the property is located. This extends the time in which a mechanic’s lien can be filed to either 4 months after the project is completed, or 6 months after filing the extension of time — whichever occurs first. This extension is likely not available on one or two family residential projects.

Remember that you must also send a notice of intent to lien at least 10 days prior to filing your mechanics lien and that sending a notice of intent does not extend your lien deadline. Plan to send this notice of intent to lien with sufficient time (at least 11 days after) to file your mechanics lien.

3) There Are Two Categories of Colorado Mechanics Liens

There are two categories of Colorado: the Section 101 mechanics lien Mechanics Liens and the Section 105 mechanics lien

There are two categories of Colorado mechanics liens: the Section 101 mechanics lien Mechanics Liens and the Section 105 mechanics lien.
Section 101 mechanics lien – this is what contractors and suppliers file when the work is commissioned directly by the property owner.
Section 105 mechanics lien – this document is filed when the work is commissioned by a tenant
For all intents and purposes, the two types of mechanics liens are identical. The exception is simply that under the Section 105 mechanics lien, the property owner can avoid liability and crush the mechanics lien rights on the project.

To do so, property owners must post a “notice of non-liability” within 5 days of becoming aware that construction is being performed at the site. If this notice is not posted or posted late, the property is subject to the mechanics lien.

We previously wrote about this issue in this article: Colorado Mechanics Lien Available Even When Tenant Contracts for Work

4) Know The Foreclosure Deadline

Mechanics lien claims do not last forever. See this frequently asked questions article, for example: Does A Mechanics Lien Cloud Title Forever?

Colorado law requires that a mechanic’s lien be enforced hat a mechanic’s lien be enforced within 6 months of the date the project was completed, or labor or materials were last furnished to the project. If this 6-month period passes without an action being filed to enforce the lien, the lien expires.

5) Colorado Mechanics Liens Relate Back to First Work for Priority Purposes

For the purposes of establishing priority between Colorado mechanics liens and any other encumbrance on the property, mechanics liens relate back to the first commencement of work under the contract between the owner and the first contractor. This means that all mechanics liens have equal priority, and that the priority of a Colorado mechanics lien is not dependent on the time the lien claimant actually furnished labor and/or materials to the property.

For frequently asked questions and more information on Colorado lien law, visit our Colorado resources page.

Article sourced from: http://www.zlien.com/articles/colorado-mechanics-lien-five-things-to-know-about-the-lien-law/