Filing a mechanics lien is a very powerful method in recovering payment from delinquent clients. When a mechanics lien is recorded, potential investors can see the unpaid debts related to a property, effectively reducing the property’s market value. Property owners then try to do everything in their power to settle outstanding payments and get rid of a mechanics lien.
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In Colorado, filing a mechanics lien has specific rules and requirements that must be followed. Failing to follow these rules can invalidate a mechanics lien, so it is very important that you familiarize yourselves with the requirements and track all important deadlines.
This guide will show you how to file a mechanics lien in Colorado. It also answers basic questions about the process and provides tips to ensure that you successfully leverage your lien rights.
- Who can file a mechanics lien in Colorado?
- Pre-lien notices in Colorado
- When do you file a Colorado mechanics lien?
- How to file a mechanics lien in Colorado
- Important deadlines to remember when filing a mechanics lien in Colorado
- Best practices when filing a mechanics lien in Colorado
Who can file a mechanics lien in Colorado?
Parties such as general contractors, subcontractors, and material suppliers have lien rights in Colorado. Equipment lessors, laborers, and design professionals including engineers and architects may also record a mechanics lien in the state.
Note, however, that for services worth over $500, a written contract must be executed in order for a construction participant to have lien rights. If your contract is for over $500 but you do not have it in writing, you will not be allowed to record a valid mechanics lien in Colorado.
Pre-lien notices in Colorado
There are two important pre-lien notices in Colorado to take note of: the preliminary notice and the notice of intent to lien.
Who must serve a preliminary notice in Colorado?
No party is required to serve a preliminary notice in Colorado. However, serving a preliminary notice may allow a subcontractor or a material supplier to get the property owner to pay them directly or to withhold payment from the general contractor.
When do you serve a preliminary notice?
There is no deadline for serving a preliminary notice as it is only an optional notice in Colorado. If you choose to serve a preliminary notice, you may do so at any time before serving the Notice of Intent to Lien and recording a Colorado mechanics lien.
What must be included in your preliminary notice?
You may include the following details in your Colorado preliminary notice:
- Your name and address
- The name and address of the party who hired you
- A statement saying that you will furnish or have furnished services to the project
- A description of services provided or to be provided
- A reasonable estimate or the agreed-upon value of the services
What happens if you do not serve a preliminary notice?
Your lien rights will not be affected if you do not serve a preliminary notice in Colorado. It is an optional preliminary notice that affords you certain benefits. If you do not have a direct contract with the property owner, you are strongly recommended to serve a preliminary notice in Colorado even if it is not required to do so.
Notice of Intent to Lien
Who must serve a Notice of Intent to Lien in Colorado?
All lien claimants are required to serve the property owner a Notice of Intent to Lien in Colorado. Unlike the preliminary notice, a Colorado Notice of Intent to Lien is mandatory to preserve one’s lien rights.
When do you serve a Notice of Intent to Lien?
The Notice of Intent must be served on the property owner 10 days prior to recording a mechanics lien. To ensure that you serve the Notice of Intent to Lien on time, make sure that it is delivered no later than 10 days before the deadline for recording a Colorado mechanics lien.
What must be included in your Notice of Intent to Lien?
The following details may be included in your Notice of Intent to Lien:
- Your name and address
- The name and address of the property owner
- A description of the property location sufficient for identification
- A description of the labor and materials you provided to the project
- The unpaid amount to be claimed with a mechanics lien
- A statement saying that you will be recording a mechanics lien in 10 days if the outstanding debt remains unpaid.
Note that a completed and notarized copy of your mechanics lien form must be attached to your Notice of Intent when you serve it on the owner. This means that by the time you serve the Notice of Intent to Lien, your mechanics lien form should be ready for filing.
What happens if you do not serve a Notice of Intent to Lien?
You are not allowed to record a mechanics lien in Colorado without serving a Notice of Intent to Lien 10 days prior to the recording date. Keep this in mind to ensure that you keep your lien rights protected.
When do you file a Colorado mechanics lien?
The deadline for filing a Colorado mechanics lien depends on what you do in a project.
For general contractors, subcontractors, and material suppliers, you should record a Colorado mechanics lien within 4 months of the last date of providing services to a project. This 4-month period may be shortened to 2 months for single- or two-family residential units if a bona fide purchaser buys the property.
For laborers, you should file a Colorado mechanics lien within 2 months of project completion.
Note that these deadlines are strictly enforced. Your Notice of Intent to Lien must be served no later than 10 days before the applicable deadline elapses.
Also note that a construction participant may file a Notice of Extension of Time to File Lien in the clerk’s office of the county where the property is located. This may extend the deadline to 6 months after the filing date or to 4 months after project completion. Unless you intend to file a deadline extension notice, the original 4-month or 2-month filing period stands.
How to file a mechanics lien in Colorado
1. Prepare your Colorado mechanics lien form
Colorado Statutes Station 38-22-109 requires your mechanics lien form to have the following details:
(a) The 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;
(b) The name of the person claiming the lien, the name of the person who furnished the laborers or materials or performed the labor for which the lien is claimed, and the name of the contractor when the lien is claimed by a subcontractor, or, in case the name of such contractor is not known to a lien claimant, a statement to that effect;
(c) A description of the property to be charged with the lien; and
(d) A statement of the amount due to the claimant.
Note that you must also include an affidavit stating that you have served a Notice of Intent on the property owner 10 days prior to recording the mechanics lien. This affidavit serves as proof of service for your Notice of Intent to Lien.
When preparing the Colorado mechanics lien form, keep in mind the following tips:
- If there are multiple property owners, it is best practice to write all their names.
- If you are filing a mechanics lien on behalf of your business, make sure that you write your business name in full, including the appropriate suffixes such as Ltd. or Inc.
- If you do not know the legal property description, you may write a location description that is sufficient to identify the property. However, it is still best practice to include a legal property description for accuracy.
- If you have incurred collection costs in pursuing payment from your client, you may not include those additional costs to your mechanics lien claim. Late fees and other collection costs do not count towards the amount that you can claim via a mechanics lien.
After preparing the mechanics lien form, it must be notarized prior to filing. You must sign your Colorado mechanics lien form while in the presence of an authorized notary officer.
2. Serve a Notice of Intent to Lien on the property owner
Ten days before recording a mechanics lien, you should serve a Notice of Intent to Lien on the property owner via personal delivery, registered mail, or certified mail with return receipt requested. This is a strict requirement. Without serving a Notice of Intent to Lien, you are not allowed to record a valid Colorado mechanics lien.
Note that the Notice of Intent to Lien must be served with the notarized copy of your mechanics lien form. Your mechanics lien must therefore be ready and notarized at least 10 days prior to filing.
After serving the Notice of Intent to Lien, you should prepare an affidavit stating that you have successfully served the notice of intent on the property owner. This affidavit must be attached to your mechanics lien form when you finally record your claim in the county clerk’s office.
3. Record the Colorado mechanics lien
In most cases, serving the Notice of Intent to Lien in Step 2 can be enough to secure your payment. The idea of serving a Notice of Intent to Lien is to warn a property owner about your intention to record a mechanics lien, and most owners will do everything to keep their properties lien-free.
If, unfortunately, the property owner does not take any action to settle the payment 10 days after you served the notice of intent, you should go ahead and record your mechanics lien form.
Where do I file a Colorado mechanics lien?
The Colorado mechanics lien must be recorded in the office of the clerk of the county where the property is located.
Note that if a property is located in more than one county, you must record your mechanics lien in the county where the “principal part” of the property is located. This is important to remember since Colorado is one of the few states that allow filing only in one county in cases where a single property is located in multiple counties.
How do I record a Colorado mechanics lien?
Filing the mechanics lien may be done in person, by mail, or electronically.
When filing the Colorado mechanics lien in person or by mail, make sure to bring two copies of your mechanics lien form. This is important so you can have a copy of your mechanics lien after it is filed. If filing by mail, you should also include a self-addressed envelope and return instructions so the clerk will know how to give you back your certified copy.
Remember that filing a mechanics lien isn’t free. When filing in person, you must be ready to shoulder the filing fees via cash or blank cheques. When filing by mail, you must include in your parcel a check or a money order for the exact filing costs. Call the county clerk office to know how much exactly you need to pay when filing.
If you choose to file a mechanics lien electronically, you must first verify that the county where the project is located allows electronic filing. Make sure that you upload the completed mechanics lien form as well as the affidavit for serving the Notice of Intent to Lien. The registry’s website will give you a quote prior to recording the mechanics, so be ready to provide payment electronically.
How much does it cost to record a mechanics lien in Colorado?
Filing fees vary depending on the county, so it is best practice to call the county clerk’s office before you record a mechanics lien if you want to know the exact cost for recording your documents.
In general, the fees are assessed by a standard cost for the first page (typically around $13) and additional costs for additional pages and additional copies. Filing costs for additional pages can range between $5 and $10 per page. Also note that surcharges may be charged for filing electronically.
Must I notify the property owner that a mechanics lien has been recorded?
No, Colorado does not require a lien claimant to notify the property owner about the recorded mechanics lien.
However, you may want to let the property owner know about your mechanics lien anyway so they start taking the steps in releasing your payment.
The point of recording a mechanics lien is to increase your leverage when trying to recover payment, so it may help your case if you notify the property owner about your mechanics lien, even if you are not obligated by the laws to do so.
4. Enforce/release the mechanics lien
After successfully filing your Colorado mechanics lien, you will either need to enforce the mechanics lien or release the mechanics lien. If the debt gets settled and you receive your payment, you must release your mechanics lien. If the debt remains unpaid, you must enforce your mechanics lien.
Enforcing a Colorado mechanics lien
Enforcing a mechanics lien means initiating a foreclosure lawsuit. If you win the lawsuit, you will be able to recover your payment through the foreclosure sale of the property.
A Colorado mechanics lien is enforceable within 6 months after project completion or within 6 months after your last day of work, whichever is later. Beyond the applicable 6-month period, a mechanics lien expires and may no longer be enforced.
Note that enforcing a mechanics lien and initiating the foreclosure lawsuit will most likely require the help of a legal counsel. It is a full-blown lawsuit, which can take your time and resources. Prior to enforcing a mechanics lien, you may want to serve a Notice of Intent to Foreclose on the property owner to give them a warning. This may be enough to prompt them to settle the payment instead of dealing with a foreclosure lawsuit.
Releasing a Colorado mechanics lien
Most of the time, enforcing a mechanics lien may not be necessary since property owners often end up settling debt as soon as a mechanics lien enters the picture. When property owners release the payment, they usually also ask the lien claimant to file an acknowledgment of mechanics lien satisfaction to clear up the mechanics lien record.
If you get paid for your services and the property owner asks that you file an acknowledgment of lien satisfaction, you must file the acknowledgment within 10 days of receiving the written request. Filing an acknowledgment of satisfaction is done in the same clerk’s office where the original mechanics lien was recorded.
Note that failing to record an acknowledgment of satisfaction within 10 days of receiving the request may subject you to penalties of $10 for every day that you delay filing the satisfaction notice. Be sure to comply with this requirement as it does not only clear up the property’s mechanics lien record but also settles the conflict between you and the property owner.
Important deadlines to remember when filing a mechanics lien in Colorado
Best practices when filing a mechanics lien in Colorado
1. Prepare the Colorado mechanics lien form early
In Colorado, you are expected to serve a Notice of Intent to Lien 10 days prior to filing a mechanics lien. This notice must be accompanied by a completed and notarized mechanics lien form, which means that your mechanics lien must be ready for filing at least 10 days prior to actually recording it with the county clerk. You must prepare your mechanics lien form early to make sure that you record your Colorado mechanics lien on time.
2. File your mechanics lien in person or electronically
Filing a mechanics lien by mail is allowed, but it may cause delays especially when issues are identified. For example, you may mail the mechanics lien form to the wrong county or you may not include the exact amount to cover the filing costs. These issues can be easily addressed when you file in person or electronically, so you are strongly recommended to record a mechanics lien either in person or online.
3. Serve a Notice of Intent to Foreclose before enforcing a mechanics lien
Enforcing a mechanics lien will take up your time and resources because it means filing a full-blown lawsuit against the property owner(s). Before you initiate the foreclosure lawsuit, you may serve a Notice of Intent to Foreclose on the property owner to let them know of your plans. If they know that you are about to launch a suit, they may end up finally settling the outstanding debt just to avoid further legal woes.