Important information regarding Colorado mechanic's lien rights.

With problems in the construction economy having accelerated over the past eighteen months or more, there has been a substantial increase in mechanic’s lien activity and associated litigation. The typical mechanic’s lien claimant is a material supplier, a trade subcontractor, or even a general contractor that has not been paid by the developer/owner of the construction project. The reason for filing a mechanic’s lien claim is that it offers the prospect in many cases to make the unpaid construction professional a priority creditor, with a lien on the real estate that is superior to the construction lender.

One of the primary rules governing a mechanic’s lien claim is that the creditor’s formal written “Notice of Intent to File a Mechanic’s Lien” (hereafter “Lien Notice”) must be served on the owner and general contractor and filed in the County land records, all within four months of the last substantial work done on the construction by the party claiming the lien. In addition, there is a required minimum ten day period between serving the lien on the owner and general contractor, and that means that a lien claimant really has to accomplish service of the Lien Notice not less than three and a half months after the creditor’s last substantial work on the project.

As a practical matter it is advisable to work well within these deadlines rather than waiting until the four month window is about to close. The reason for this is that a creditor needs to (1) prepare a completely accurate Lien Notice; (2) locate and serve the owner and general contractor; (3) wait at least ten days; and (4) record a copy of the complete and served Lien Notice in the land records of the county where the work was done -- all within the four month period.

For reasons of timing it is advisable to prepare and serve the written Lien Notice approximately seventy-five days after the last substantial work is done on the project. Most importantly, if there is any difficulty in serving the owner and general contractor parties by certified mail within the time allowed, it will be advisable to have them served personally by a professional process server. Under Colorado law it is possible that a mechanic’s lien can be defeated in the end if the certified mail is simply refused by the owner or general contractor, and delivery of the Notice is not accomplished at all, or not accomplished timely.

The two morals to this story are that if you have mechanic’s lien claims (1) don’t wait more than seventy-five days to begin the process of asserting the claim with formality by means of a written Lien Notice, and (2) don’t assume that you have accomplished the service of the Lien Notice on the owner and general contractor just because it was sent by certified mail and either was refused or was unclaimed.

If you have any questions regarding Colorado mechanic's lien law, please contact Buck Mann at (303) 987-7143 or mann@hhmrlaw.com.