The Mechanic’s Lien process in Colorado is governed by statute, namely, C.R.S. § 38-22-101, et seq. One key issue to be aware of is that the Mechanic’s Lien process is extremely deadline intensive. Missing a deadline by just a day can void a contractor’s lien rights. Below is a general overview of this statutory and time-sensitive process.
What is the deadline to record a Mechanic’s Lien?
With certain limited exceptions, a Mechanic’s Lien must be recorded in the county in which the subject property is located no later than 4 months after the lien claimant’s last substantial work on the property. Punch list and other trivial work should not be considered when calculating this deadline. It is best to err on the side of caution when calculating the last date of substantial work to avoid skirmishes over whether the lien is timely.
Note, however, that at least 10 days before recording the Mechanic’s Lien Statement, a “Notice of Intent to Record Lien Statement” must be personally served on, or sent via certified mail to, the record owner of the property along with the general contractor (if applicable). Recording a Mechanic’s Lien without first serving a Notice of Intent at least 10 days prior will void the lien.
What is the deadline to foreclose on a Mechanic’s Lien?
A lawsuit to foreclose a Mechanic’s Lien must be filed within 6 months from the last date of substantialwork on the property. If a lawsuit to foreclose a mechanic’s lien is not filed within that time, the contractor loses the right to foreclose the lien. A contractor may still have other remedies, however, such as breach of contract and/or unjust enrichment.
Is it possible to extend the deadline to record a Mechanic’s Lien?
Yes. The Mechanic’s Lien statute allows a contractor to file a “Notice Extending Time to File a Lien Statement” in the county where the property is located. The Notice must include the legal description and/or address of the property; the name of the person with whom the lien claimant has contracted; and the lien claimant’s name, address, and telephone number. The Notice extends the time for filing a Mechanic’s Lien statement to 4 months after completion of the structure/improvements or 6 months after the date the Notice was filed, whichever occurs first. The Notice automatically terminates 6 months after filing. If the structure/improvements have not been completed by that time, then prior tothe termination date, the lien claimant may file an amended Notice that will be effective for an additional 6 months, or 4 months after the completion of the structure/improvements, whichever occurs first.
What are some common defenses to a Mechanic’s Lien Claim?
- Lien is Untimely – One common defense is that the statutory deadlines were not met (i.e., the lien was recorded late), and thus the lien is void.
- Amount Overstated – Another common defense is that the amount claimed in the Mechanic’s Lien is knowingly overstated, which is a basis for voiding the lien. A contractor cannot knowingly claim an amount in excess of the amount reasonably due.
- Homeowner’s Defense – If a homeowner can prove that he/she paid the general contractor the full contract price for the work performed, this is a complete defense to a mechanic’s lien claim. This defense only applies in the context of single-family dwellings.
This article is intended to provide general information and, therefore, should not be treated as legal advice. If you have questions about a specific legal issue, nothing will substitute for the advice of a qualified attorney.
For questions, please contact Jon Goodman.