Author(s): Jeffrey D. Phipps
Published: 04/09/2010
Contractors must always be careful in protecting their rights to payment on projects for which they have provided materials and services. In these tough economic times and with payment defaults on the rise, contractors often attempt to perfect their mechanic's lien rights to secure their interests through the subject real property. To assist both contractors and owners in determining the validity of a mechanic's lien, here is a reminder of the mechanic's lien basics pursuant to the Colorado Mechanic's Lien Statute C.R.S. § 38-22-101, et. seq.:
What information needs to be in a mechanic's lien?
Any person who wishes to place a mechanic's lien against property must record a statement of lien with the office of the county clerk and recorder of the county in which the property is located. The statement must include: name of the owner or reputed owner of such property or, in case such name is not known to him, a statement to that effect; name of the person claiming the lien; name of the person who furnished the laborers or materials or performed the labor for which the lien is claimed; name of the contractor when the lien is claimed by a subcontractor or by the assignee of a subcontractor, or, in case the name of such contractor is not known to a lien claimant, a statement to that effect; a description of the property to be charged with the lien sufficient to identify it; and a statement of the amount due or owing the claimant. The statement must be sworn to and signed by the party seeking the mechanic's lien.
When must a mechanic's lien be recorded?
Generally, a mechanic's lien must be recorded at any time within four months after the day on which the last labor is performed or the last laborers or materials are furnished by the lien claimant. Laborers, by the day or piece, must however file for a lien after their last work is completed and within two months after completion of the project. It is important to note that there must be a notice of intent to file a lien statement served upon the owner (and general contractor) at least 10 days before the time of recording the lien statement with the county clerk and recorder. Thus, the notice must be served early enough to allow 10 days to elapse and still meet the recording deadlines referenced above. Exceptions and extensions are available, so one should consult the applicable statute when pursuing a lien.
When must a mechanic's lien foreclosure action be brought?
No lien shall hold the property longer than six months after completion of the project, unless an action to foreclose is commenced and a notice of lis pendens recorded within that time. Abandonment of work for three consecutive months is deemed to be the completion of the project; thus the six-month period begins at that time as well. As such, contractors with properly recorded mechanic's liens should remain aware of any subsequent sustained stoppages of work on the project.
Contractors must be cognizant of all the relevant dates and deadlines to ensure proper perfection of their lien rights. For them, the rule of thumb in dealing with mechanic's liens is "record now and negotiate later." On the other hand, owners and lenders who find themselves involved in a mechanic's lien foreclosure suit should carefully check whether the lien claimant has complied with the requirements of the Colorado Mechanic's Lien Statute. If they have not, the lien foreclosure claim against the subject real property may be dismissed by the Court as a matter of law.
Jeffrey Phipps is an associate in RJ&L's Denver office. He focuses his law practice on commercial and complex civil litigation, including construction and real estate litigation, contract disputes and labor and employment matters. Mr. Phipps can be reached at 303-628-9513 or by email at jphipps@rothgerber.com.