• Colorado is a FULL PRICE lien state (if the optional Notice to Owner is served).
• Lien rights on private projects is very broad.
• Additional remedies may be available under the state’s Construction Trust Fund statutes.
• Rental Equipment: Last furnishing should there for be calculated from when the equipment was last actually used.

Notice Speed Bumps

• Important Reminder:  Claim amounts are required on all statutorily required NTOs.
• Colorado does not have a mandatory preliminary lien notice requirement; however, a lien claimant may send a preliminary notice under §38-22-102, C.R.S. The preliminary notice is sent to the owner, superintendent of construction, agent, architect or financing institution or other person disbursing funds. Upon giving the notice, 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...”   Thank you to Jean Arnold, Esq., Arnold & Arnold LLP
  Preliminary notices are underutilized when served they will create additional rights.

Mechanic’s Lien Speed Bumps

• Residential:  An affirmative defense is available to owners of existing or new single-family dwellings occupied as a primary residence. The defense is available if the owner either pays the full purchase price or pays the prime contractor the full contract amount plus change orders for work performed on the residence. (§38-22-102(3.5), C.R.S.).  
  In Colorado those in the contracting chain can recover the full value of their labor and materials even if they have not sent a preliminary lien notice (optional) under §38-22-102 (4) through (7), C.R.S.
  Case Law:   Crissy Fowler Lumber Company v. First Community Industrial Bank, 8 P.3d 536 (Colo. App. 2000). The Court found that the homeowner’s affirmative defense of full payment did not apply where the general contractor had been terminated before the entire project was completed even though the project ran over budget. Crissy Fowler was able to recover the entire balance due under its mechanic’s lien.  Thank you to Jean Arnold, Esq., Arnold & Arnold LLP
• If the lien is only for labor and work by the day or piece, the Statement of Lien must be recorded within 2 months after completion of the project.
• Special rules also exist for one and two family homes that could reduce the filing period from 4 months to 2 months. C.R.S. § 38-22-125.
• A lien claimant may extend the deadline to record the Statement of Lien by recording a Notice Extending Time to File a Lien Statement, pursuant to C.R.S. § 38-22-109(10).
• Recording a Notice Extending Time to File Lien Statement extends the time for the lien claimant to record its Statement of Lien to 4 months after completion of the improvements or 6 months after the date of recording the extension notice, whichever occurs first. The notice automatically terminates 6 months after it is recorded. If the project is not completed prior to the 6 month period, then the lien claimant may record a new or amended Notice Extending Time to File Lien Statement.

Foreclosure Speed Bumps

• If the Lien is foreclosed and the property sold, liens are paid based on the following ranking:
  • Laborers or mechanics working by the day or piece.
  • Subcontractors and suppliers
  • Prime contractor

• Suppliers to a suppliers have no bond claim rights in Colorado.
• Colorado Verified Claims. Contractors, subcontractors and material suppliers who provide construction services or materials on construction projects for public entities may file a Verified Claim. Under this process, funds to be paid by the public entity to the contractor may be subject to claims asserted by the contractors and suppliers.  The process for perfecting such a claim involves the filing of a a verified claim with the public entity, setting forth the amount due.  Once such a claim is received by the public entity, it is required by statute to hold funds sufficient to pay that claim pending completion of the job and a resolution of the claim.
  
  • When a public works job has been completed, the public entity identifies a time for a final settlement.  Notification of this date must be published in a newspaper of general circulation at least 10 days prior to the final settlement date.  Claims of unpaid subcontractors and suppliers may be filed up to the final settlement date.  If a Verified Claim is not filed within that time frame, then the right to file the verified claim is lost.
  • After the final settlement date passes, any parties having filed verified claims have a right to foreclose those claims.  To do so, a lawsuit must be filed within 90 days of the final settlement date.  In addition, at the time the lawsuit is filed a lis pendens must be filed with the public body that awarded the contract.  C.R.S. ' 38-26-107(2). In the event such a claim is filed, the lawsuit would proceed and the funds would remain held by the public entity pending a resolution of the claim. The failure to file a lawsuit within the 90-day period will result in the funds being released and paid to the contractor.  C.R.S. ' 38-26-107(3).  After that time, the remedy would no longer be available.