Colorado State Lien Law Summary

Suppliers of labor, mater­ials, rental machinery, tools or equipment to owner, general or sub. Agencies or others furnishing laborers are covered. Suppliers to suppliers are not covered. Where the owner and general fail to file the contract, each claimant becomes a statutory agent of the owner, thus a supplier to a sub-subcontractor will have lien rights. Also, where the subcontractor is responsible for a major portion of the project, a supplier to a sub-subcontractor may have lien rights. The case law is somewhat contradictory on these topics, however, so proceed with caution where a claimant is supplying someone more remote than a first-tier subcontractor. [38-22-101; Schor at §7.04[B]; American Factors Associates, Ltd. v. Triangle Heating & Sheet Metal Co., 503 P.2d 163 (1972); Kobayashi v. Meehleis Steel Co., 472 P.2d 724, 28 Colo.App. 3271 (1970); Schneider v. J.W. Metz Lumber Co., 715 P.2d 329 (Colo.1986)]

NOTE that a homeowner may be able to bring a claim against the trust fund discussed below, however funds recovered by the owner will be held in trust for the unpaid subs and suppliers. [Syfrett v. Pullen, 209 P.3d 1167 (Colo.App.2008)]

Suppliers of labor (including agencies), mater­ials, rental machinery, tools or equipment to the general or sub. An employee benefits trust fund apparently can bring a claim. Agencies or others furnishing laborers are covered. Per Schor, apparently suppliers to sub-subcontractors will be protected, where the sub assumes a substantial specified portion of the work. Suppliers to suppliers are NOT protected. [38-26-106, 38-26-101; Western Metal Lath, a Div. of Triton Group, Ltd. v. Acoustical and Const. Supply, Inc., 851 P.2d 875 (Colo.1993); Schor at §7.02[D]; Trustees of Colorado Carpenters & Millwrights Health Ben. Trust Fund v. Pinkard Const. Co., 604 P.2d 683 (1979)]

-Land containing improvement and a convenient space around it. [38-22-103]

-If contractor provides a payment bond, then lien is only against the bond. [38-22-129]

-There are also provisions requiring contractors and subcontractors to hold all payments they receive on a project in trust for the payment of their subcontractors, suppliers, etc. Failure to do so may be theft. In addition, if a claimant is unpaid, he or she may bring a claim against the contractor or subcontractor in order to collect from these trust funds. It is not necessary to have filed a lien claim to bring a claim against the trust funds, and such a claim may not be dischargeable in bankruptcy. In addition, a homeowner may be able to bring a claim on the trust funds, though any funds recovered will be held in trust for the unpaid subs and suppliers. [38-22-127; In re Regan, 151 P.3d 1281 (Colo. 2007); Syfrett v. Pullen, 209 P.3d 1167 (Colo.App.2008)]]

-Payment bond. Note that where the contract exceeds $500 million, the bond may be for only half the amount of the contract. [38-26-106]

-Contract funds. NOTE that a bond can eventually be substituted for the contract funds, after a claim has been filed. [38-26-107, 38-26-108] NOTE that a court has held that the provisions requiring contractors and subcontractors on private projects to hold all payments they receive on a project in trust for the payment of their subcontractors, suppliers, etc., also apply to public works projects. [38-26-109; In re Dorland, 374 B.R. 765 (Bankr. D. Colo. 2007)]

LIEN:

Any claimant except a general contractor MAY give notice. It is NOT re­quired; HOWEVER the effect of this no­tice is to re­quire the own­er to withhold from the general sufficient funds to satisfy the claim plus rea­sonable costs. [38-22-102] As to the notice to disburser, the effect of that notice is to require the disburser of funds to pay the claimant directly. Thus it is highly recommended to give this notice. [38-22-126]

PAYMENT BOND:

Not applicable.

Not required.

LIEN:

Owner or reputed owner, or to owner’s superintendent of con­struction, agent, or archi­tect; or to “disburser”, i.e., financial institu­tion/­lender to owner or contrac­tor. [38-22-102, 38-22-126]

PAYMENT BOND:

Not applicable.

Not applicable.

LIEN:

At any time. [38-22-102, 38-22-126]

PAYMENT BOND:

Not applicable.

Not applicable.

LIEN:

Notice to owner, etc.:

-That claimant has performed labor or fur­nished or agreed to furnish laborers or materials to or for a principal contractor or any person acting by authority of the owner or reputed owner;

-General description of kind of laborers, labor or materials furnished;

-Name of person for whom labor or materials fur­nished or to be furnished;

-Estimated or agreed value of that already furnished; and

-Agreed value of the whole to be furnished. [38-22-102]

Notice to “disburser”:

-Property address or legal description, or by such other description as will identify the real pro­perty;

-The claimant’s name, ad­dress, and tele­phone num­ber;

-Name of the person with whom claimant has con­tract­ed;

-Gen­eral state­ment of claimant’s con­tract. [38-22-126]

PAYMENT BOND:

Not applicable.

Not applicable.

LIEN:

-To owner, etc: Personal delivery or by leaving at home/office with person in charge. It is apparently only effective if it is actually received. [38-22-102]

-To disburser: By certi­fied mail or personal delivery, or by leaving it at the disburser’s residence or place of business with someone in charge. It is only effective if it is actually received [38-22-126]

PAYMENT BOND:

Not applicable.

Not applicable.

LIEN:

All claimants. [38-22-109]

PAYMENT BOND:

Not applicable.

An interim notice is not required.

LIEN:

Notice of Intent to File a Lien Statement. Advisable to also include information required in lien statement. In fact, claimant can attach the lien and required attachments and serve both simultaneously, as long as the lien is filed more than ten days after service. [38-22-109; Manguso v. American Sav. and Loan Ass’n, 782 P.2d 866 (Ct.App. Div. I, 1989)]

PAYMENT BOND:

Not applicable.

Not applicable.

LIEN:

Notice must be received at least ten days before filing lien statement. A claimant is not required to give an additional notice of intent prior to filing an amended lien statement that only amends the lien amount, as long as the notice was timely given before the original lien notice was filed. [38-22-109; Sure-Shock Electric, Inc. v. Diamond Lofts Venture, LLC, — P.3d —-, 2014 WL 4242399 (Ct.App.Div.4, 2014)]

PAYMENT BOND:

Not applicable.

Not applicable.

LIEN:

All claimants. [38-22-109]

PAYMENT BOND:

Anyone with a claim under $2,000. [38-22-129, 38-22-130]

PAYMENT BOND:

None required.

CONTRACT FUNDS:

All claimants. [38-26-107]

LIEN:

County clerk and recorder of county where property is located. [38-22-109]

PAYMENT BOND:

If claim is under $2,000, then notice is given to contractor and surety. [38-22-129, 38-22-130]

CONTRACT FUNDS:

Board, of­ficer, etc. of public body letting the contract. [38-26-107]

LIEN:

LABOR CLAIMANTS (who do not supply materials): Recorded after last labor performed and at any time not more than two months after completion of im­provement.

ALL OTHER CLAIMANTS: Recorded within four months after last labor or materials supplied by claimant. (New or amended statements must be filed wit­hin this time.) [38-22-109] When working on a single- or double-family dwelling, notice must be given within 2 months after completion of the project, to retain priority over a bona fide purchaser. [Schor at §7.04[C]] On an owner-occupied single-family dwelling, however, the sooner the notice is given the better, as the owner will be protected if they have fully paid the principal contractor before the notice is given. [38-22-109; 38-22-125] NOTE, HOWEVER, that the claimant can extend the deadline to file a lien by filing a notice with the county clerk and recorder within the time period for filing a lien statement. This notice must state:

-The legal description of property;

-The name of person with whom the claimant con­tracted; and

-The name, address and phone number of the claimant.

Filing this notice serves as notice that the claimant may later file lien, and extends the time for filing the lien statement to the sooner of four months af­ter completion of the pro­ject or six months after filing this notice. If the project is not yet com­pleted, the claimant may file a new or amended no­tice within the six-month period and thereby further extend the time within which to file a lien state­ment. [38-22-109]

PAYMENT BOND:

If the claim is less than $2,000, then notice must be received within 4 months after completion of work. [38-22-129]

CONTRACT FUNDS:

At any time before final settlement of project. [38-26-107]

LIEN:

Filed, along with proof of service of Notice of Intent to File Lien and copy of that notice as well. [38-22-109]

PAYMENT BOND:

Personal service or certified or registered mail. It is not clear whether the notice will be effective if delivery is refused, thus recommend ensuring actual receipt, if necessary. [38-22-129, 38-22-130]

CONTRACT FUNDS:

Filed with the board, officer or public body awarding the contract. [38-26-107]

LIEN:

-Name of owner or reputed owner (or statement that owner’s name is unknown to claimant);

-Name of claimant;

-Name of party supplying materials or labor to the claimant (apparently this is directed to subcontrac­tors);

-Name of party to whom supplied;

-Name of contractor (or statement that contractor’s name is unknown to claimant);

-Description of property sufficient for identifica­tion. Note that an overly broad description will not invalidate an otherwise valid lien. [Sure-Shock Electric, Inc. v. Diamond Lofts Venture, LLC, — P.3d —-, 2014 WL 4242399 (Ct.App.Div.4, 2014)]

-Amount due to claimant at the time of filing the notice. An excessive lien will be void. Note, however, that interest is recoverable at the agreed rate, or if there is no agreed rate, than at 12% per annum, and note that including interest in the lien amount does not necessarily render the lien excessive, especially if interest is provided for in the claimant’s contract [Honnen Equipment Co., Inc. v. Never Summer Backhoe Service, Inc., 261 P.3d 507 (Colo.App.,2011)]. NOTE that the direct contractor’s lien is limited to the amount owed ON THE DIRECT CONTRACT after all other liens have been satisfied. Furthermore, where the direct contract is not filed, subs and suppliers (but not the general contractor) will have a lien for the value of their labor or materials; it is not limited to the contract balance. In addition, if the claimant files an excessive lien in light of the information available to the claimant at the time he or she files the lien, the entire lien will be invalid. [Byerly v. Bank of Colorado, — P.3d —-, 2013 WL 979373 (Colo.App., 2013)]

-Verified; signed and sworn to by the party, or by one of the parties, cla­iming such lien, or by some other person in his or their behalf, to the best knowledge, information, and belief of the affiant. While the case law does not say with certainty whether the claimant’s attorney may sign the notice, it appears from the statutory language that it would be acceptable. If the attorney or some other person is signing the affidavit on behalf of the claimant, it is recommended that the verification include language so reflecting that the affiant is signing on behalf of the claimant. [38-22-109; 38-22-102; Schor at §7.04[C]]

NOTE that where the claimant supplies materials or labor to more than one structure being built and constructed by the same person, under the same contract, the claimant may apportion the claim among the structures, but if the costs cannot readily and definitely be apportioned among the structures, the claimant may treat the improvements as one structure or improvement, and file one lien covering the entire project. Though it is not recommended, a claimant is allowed to bring its entire claim against fewer than all of the properties in a multi-property project, as long as the debtor holds the sole interest in all of the properties benefiting under the contract. In that case, however, the decision to include only a portion of the properties may affect the extent to which the claimant can recover from the remaining properties. [38-22-103; Compass Bank v. Brickman Group, Ltd., 107 P.3d 955 (2005)]

-REMEMBER to attach affidavit of service of the notice of intent to file lien, when filing the lien itself. [Schor at §7.04[C]]

PAYMENT BOND:

(For claims less than $2,000; no notice is required for larger claims.) Affidavit stating that claimant furnished labor or materials used or performed in the prosecu­tion of the work on such project, that claimant is unpaid, and the amount of the claim. Supporting documents should be attached. If the affidavit is uncontroverted for 45 days, the surety is required to pay the claimant directly. Neither the statute nor the case law indicates whether anyone other than the claimant can sign the affidavit. [38-22-130]

CONTRACT FUNDS:

Verified statement of amount due and unpaid. Neither the statute nor the case law indicates whether anyone other than the claimant may sign the verified statement of the direct contract. [38-26-107]

LIEN:

Within the sooner of :

1. Six months after completion of the project, the date of last work performed, or the date of last materials furnished, whichever is later; or
2. One year after filing the lien.

Where the project is ongoing thereafter, the lien may be extended if, within 30 days after each anniversary of filing the lien, the cla­imant files a statement that the improvements are not yet completed. The claimant must also file a lis pendens when filing suit, and no later than six months after the last labor or materials are furnished, or the project is complete. [38-22-109, 38-22-110; Schor at §7.04[B]]

Owner’s bond. If the owner files a bond in order to release the mechanic’s lien, then the claimant may still bring suit against the bond. The time limitations for doing so are identical to those for foreclosing the mechanic’s lien. To have a valid claim against a lien release bond, the claimant must timely bring a foreclosure action on the bond. [38-22-131, 38-22-133; Mountain Ranch Corp. v. Amalgam Enterprises, Inc., 143 P.3d 1065 (Colo.App. Dec 15, 2005)]

PAYMENT BOND:

Within 6 months after completion of last work on the project. Recording a lis pendens within that time is still required. [38-22-129; Weize Co., LLC v. Colorado Regional Const., Inc., 251 P.3d 489 (Colo.App.,2010)]

TRUST FUND VIOLATION:

Contact a Colorado attorney about this. It is longer than that for bringing a lien foreclosure action, and might be three years or longer. [In re Regan, 151 P.3d 1281 (Colo.,2007)]

PAYMENT BOND:

Within six months of completion of pro­ject, however if the bond itself provides for a longer time period to bring suit, then the bond language will control. Apparently an action is also timely if it is filed within 90 days after the final settlement. [38-26-105, 38-26-107; Schor at §7.02[D]]

CONTRACT FUNDS:

Less than 90 days after final settlement. Lis pendens must also be filed. NOTE that if a bond is given to secure the release of the contract funds, the time for suing on it is the same as the time for suing on the contract funds. [38-26-107]