TABLE OF CONTENTS 1.2 THE CONSTITUTIONALITY OF THE COLORADO LIEN LAW 1.3 LIBERAL CONSTRUCTION OF MECHANICS LIEN
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1 TABLE OF CONTENTS Chapter 1 INTRODUCTION 1.1 INTRODUCTION 1.2 THE CONSTITUTIONALITY OF THE COLORADO LIEN LAW 1.3 LIBERAL CONSTRUCTION OF MECHANICS LIEN 1.4 PRIVITY Chapter 2 LIENS ON PRIVATE CONSTRUCTION PROJECTS 2.1 PARTIES WHO CAN CLAIM A LIEN Supplying Labor Or Materials, Or Personnel Agencies That Supply Labor Claims Of Architects, Engineers, And Draftsmen A Lienor May Breach The Contract But Still Have A Right To A Mechanics Lien Sellers And Installers Of Carpets And Built-ins May Be In The Protected Group Of Those Who Can File Mechanics Liens The Lienability Of Tools Liens Of Lessors And Rentors Of Equipment And Machinery Liens Of Interior Decorators Liens Of Superintendents The Lienability Of Curbs, Gutters, And Sidewalks The Assignability Of A Mechanics Lien Claim The Lienability Of Labor Union Trusts The Lienability Of An Option Holder On Real Property Liens By Temporary Personnel Agencies Liens By Metropolitan Districts Distinguished 2.2 THE FINANCIAL COMPOSITION OF THE LIEN STATEMENT The Dollar Sum Of The Lien Statement Interest Attorney Fees Costs Filing For An Excessive Amount Forfeiture Reducing A Lien Amount By Affidavit (1/10) TOC-1
2 Colorado Liens and Claims Handbook 2.3 THE MECHANICS LIEN AS AN ENCUMBRANCE What One Claims A Lien Against What Liens May Be Filed Against Liens Against Structures Located On Mortgaged Land Liens For Remodeling Of A Structure Liens On Townhomes And Condominiums Liens On Modular Homes Liens On Subsequently Acquired Real Estate 2.4 RELATIONSHIP WITH THE CONTRACTOR AND OWNER Must The Person Claiming The Lien Have A Contract With The Owner? The Agency Relationship Does The Principal Contractor Need A Contract With The Owner? The Principal Contractor As Agent Of The Owner If The Principal Contractor Is The Agent, What Is The Basis For The Lien Claim Of A Subcontractor? The Subcontractor As An Agent Written And Oral Contracts 2.5 LIEN PROBLEMS FOR PERSONS WORKING ON THE JOB SITE 2.6 THE REAL HEADACHE ESTABLISHING A LIEN FOR THE MATERIALMAN Introduction The Materialman Special Fabrications Sufficiency Of Proof Of Delivery Of Materials To A Contractor At The Materialman s Warehouse To Sustain A Mechanics Lien Colorado Sufficiency Of Proof Of Delivery Of Materials To A Contractor At The Materialman s Warehouse To Sustain A Mechanics Lien Treatises Sufficiency Of Proof Of Delivery Of Materials To A Contractor At The Materialman s Warehouse To Sustain A Mechanics Lien Other Jurisdictions Is It Necessary That The Lien Claimant Show That Materials Delivered For Use On A Particular Project Were Actually Used? Delivery To Contractor s Warehouse TOC-2 (1/10)
3 Table of Contents Multiple Orders For One Job When Materials Are Diverted By Others Materials That Are Never Delivered The Lien Claimant Must Know In Advance The Ultimate Destination Of The Materials Where They Will Be Used Multiple Sites Explained Conclusion 2.7 NOTICE OF INTENT TO FILE LIEN CLAIM AND TIME LIMITS The Steps In Filing A Lien Claim Serving The Lien Statement And The Notice Of Intent To Lien Information For The Notice of Intent Signing The Notice of Intent Notarizing The Notice Of Intent To File A Lien Statement Listing The Proper Owners Serving The Notice of Intent What Happens If The Envelope Containing The Notice of Intent Is Returned To The Sender Undelivered? Serving The Intent But Not The Lien Statement The Date Of The Signing Of The Affidavits Signing The Affidavits No Return Receipt Card Failure To Use Addresses Multiple Owners The Time Factors The Notice Of Intent To File A Lien Statement Does Not Extend The Time For Filing The Lien Statement Additional Problems 2.8 THE LIEN STATEMENT AND TIME LIMITS Getting The Proper Information For Your Lien Statement Information To Be Included In The Lien Statement The Availability Of Preprinted Forms For The Mechanics Lien Statement And The Notice Of Intent To File A Lien Statement The Time Limits Involved In Filing A Lien Claim How Is The Time For Filing Affected If The Contract Was Required To Be Put In Writing And Filed But Was Not? Problems If The Mechanics Lien Statement Is Recorded In The Wrong County (1/10) TOC-3
4 Colorado Liens and Claims Handbook Problems If The Mechanics Lien Statement Is Recorded In A Tardy Manner Amending A Lien Statement Perfecting The Mechanics Lien Statement Effective Date Of The Lien The Last Day That Work Was Done 2.9 BLANKET LIENS AND APPORTIONMENT Blanket Liens Versus Apportionment Apportionment And When A Lien Claim May Be Apportioned 2.10 EXTENSION OF TIME AND TIME LIMITS Obtaining An Extension Of The Time Allowed For Filing A Lien The Notice Of Extension And The Notice Of Intent The Length Of The Extension 2.11 ABANDONMENT AND TIME LIMITS The Consequences When Construction Is Halted Indefinitely 2.12 PAYMENTS, WAIVER, AND RELEASE Payment Of A Bill The Legal Effect If The Words Payment In Full Appear On The Check And The Amount Does Not Pay The Bill In Full The Practical Effect Of A Lien Release Or Waiver On A Check Itself Or Attached To The Check On A Separate Sheet Of Paper How Can The Supplier Protect Himself Or Herself When He Or She Sells A Subcontractor Materials For Two Or More Separate Projects Or A Subcontractor Does Work On Two Or More Different Projects For The Same General Contractor, And Only One Check Is Issued? Which Job Is Credited? The Problems Of A Joint Payment Check The Ranking Of Mechanics Liens Payments Lien Waivers And Their Consequences Failure To Pay Funds Subject To Lien Waivers Criminal Consequences TOC-4 (1/10)
5 Table of Contents Lien Releases And Their Consequences Failure To Release Lien And Lis Pendens Attorney Fee Award Signing Blank Lien Waivers At The Beginning Of A Project Spurious Lien Statute Does Not Apply To Mechanics Liens Spurious Lien Law And Rule 60(b) Challenge Mechanics Lien As Basis For Crime Of Offering A False Instrument For Recording 2.13 LEASED REAL ESTATE Protection For The Owner When The Lessee Undertakes A Construction Project The Effect Of Leases On Lien Claims Leasehold Interests 2.14 THE TRUST FUND STATUTE Trust Fund Statute Trust Fund Application Of The Theft Statute Bankruptcy Discharge Issues Assignment Of Trust Fund Claims Owner/General Contractor Standing Duties As Constructive Trustee Funds That May Be Trust Funds 2.15 PRIORITY OF LIENS AND RANK OF LIENS/DOCTRINE OF RELATION BACK Doctrine Of Relation Back The Ranking Of Liens Chapter 3 SPECIAL RULES FOR ONE- AND TWO-FAMILY HOMES 3.1 INTRODUCTION 3.2 WHAT ARE THE SPECIAL RULES AND RESTRICTIONS REGARDING THE FILING OF LIENS ON ONE- AND TWO-FAMILY DWELLINGS? 3.3 HOW ARE THE TIME LIMITS FOR FILING LIEN CLAIMS CHANGED? (3/13) TOC-5
6 Colorado Liens and Claims Handbook 3.4 MUST THE LIEN ALWAYS BE FILED BEFORE CONVEYANCE TO A BONA FIDE PURCHASER? 3.5 CAN ONE ALWAYS FILE A NORMAL MECHANICS LIEN PRIOR TO THE CONVEYANCE OF THE HOUSE? 3.6 SPECIAL NOTICE ON RESIDENTIAL PROPERTY 3.7 SPECIAL RESCISSION RIGHTS TO HOMEOWNERS 3.8 THE ANALYSIS OF OTHER AUTHORS Chapter 4 SURETY BONDS 4.1 WHAT IS THE EFFECT OF THE PRINCIPAL CONTRACTOR S TAKING OUT A PERFORMANCE BOND, A LABOR AND MATERIALS PAYMENT BOND, OR BOTH? 4.2 HOW CAN A POTENTIAL LIEN CLAIMANT ASCERTAIN IF A BOND HAS BEEN FILED ON A PROJECT? 4.3 WHAT RIGHTS DOES A PARTY HAVE WHEN BONDS HAVE BEEN POSTED? 4.4 WHAT RIGHTS DOES A PARTY (WHO WOULD OTHERWISE BE A LIEN CLAIMANT) HAVE UNDER THE BOND? 4.5 IF PROPER BONDS HAVE BEEN TAKEN OUT BY THE PRINCIPAL CONTRACTOR, WHAT HAPPENS IF A SUBCONTRACTOR PROCEEDS TO FILE A LIEN STATEMENT? 4.6 IF BONDS HAVE BEEN FILED, SHOULD ONE FILE A MECHANICS LIEN? 4.7 CAN ONE FILE A LIEN ON PROPERTY WHERE BONDS HAVE BEEN POSTED? 4.8 HOW DOES ONE OBTAIN PAYMENT FROM A SURETY? 4.9 WHILE ATTEMPTING TO OBTAIN PAYMENT FROM A SURETY, SHOULD ONE STILL FILE A LIEN? TOC-6 (3/13)
7 Table of Contents 4.10 IF A BOND HAS NOT INITIALLY BEEN TAKEN OUT, CAN ONE BE TAKEN OUT BY THE OWNER AFTER A LIEN CLAIM HAS BEEN MADE? 4.11 IF BOND SUBSTITUTION IS MADE, WHAT ARE THE TIME LIMITS FOR TAKING ACTION ON THE BOND? 4.12 WHAT IS THE TIME LIMIT FOR A LAWSUIT? 4.13 OBTAINING A SURETY BOND AFTER SUIT HAS COMMENCED 4.14 BONDING AROUND A MECHANICS LIEN 4.15 MECHANICS LIEN REMOVAL BOND AND THE LIS PENDENS Chapter 5 NOTICES BY THE CLAIMANT AND DISBURSER 5.1 NOTICE PRIOR TO THE FILING OF A MECHANICS LIEN STATEMENT Can The Claimant Encourage The Contractor To Pay The Bill? (The Notice To The Disburser) The Notice And Its Contents To Which Parties And In What Manner Should The Notice Be Delivered? Once The Notice Is Received, What Are The Duties Of The Disburser? Once The Notice Is Received, What Are The Duties Of The Disburser? 5.2 THE NOTICE BY THE DISBURSER The Notice By The Disburser 5.3 ANOTHER PROVISION FOR A CLAIMANT S NOTICE A Method For A Lien Claimant To Be Paid Without Waiting For His Or Her Customer To Pay And Without Filing A Lien Foreclosure Lawsuit What Information Must This Notice Include? In What Manner May This Notice Be Delivered? Once Such Notice Is Given, What Are The Duties Of The Disburser? (3/13) TOC-7
8 Colorado Liens and Claims Handbook What Happens If The Funds Are Not Withheld By The Disburser? Can One Be Paid Directly By The Disburser? Chapter 6 THE LIEN FORECLOSURE LAWSUIT 6.1 WHEN AND WHERE TO FILE A FORECLOSURE LAWSUIT Time Limits To Commence A Lien Foreclosure Lawsuit Practical Issues Regarding Time To Foreclose Is It Always Worthwhile To File A Lien Foreclosure Lawsuit? Alternatives To Filing A Mechanics Lien Foreclosure Lawsuit What Happens If You Do Not Foreclose Your Lien? Where To File A Lien Foreclosure Action 6.2 LIEN FORECLOSURE PLEADINGS AND PROCESS How To Determine If A Foreclosure Lawsuit Has Already Been Filed The Complaint The Parties Who To Join As Plaintiffs And Defendants Claims For Relief Unjust Enrichment The Lis Pendens Answer, Counterclaim, And Cross-Claim Disclaimer Affirmative Defenses In Personam And In Rem Defined Intervention Consolidation Of Lien Foreclosure Lawsuits Claim Preclusion Mechanics Lien Foreclosure After A Money Judgment Right To Recover Attorney Fees In Mechanics Lien Cases For Frivolous Lawsuits 6.3 MATTERS PRIOR TO THE TRIAL Foreclosure Involving Mechanics Lien Release Bonds Discovery Via C.R.C.P. And By Court Order Through Affidavits Summary Judgment Stipulations And Settlements Real Estate Foreclosures Real Estate Foreclosures Redemption Rights TOC-8 (3/13)
9 Table of Contents 6.4 TRIAL, EXECUTION, AND APPEALS Jury Or Court Trial? Speed Of Trial Burden Of Proof The Judgment Rights On Appeal Liens Versus Security Interests Who Wins? Chapter 7 SATISFYING THE MECHANICS LIEN FORECLOSURE JUDGMENT 7.1 INTRODUCTION AND HISTORICAL PERSPECTIVE 7.2 ENTRY OF JUDGMENT AND SALE OF THE PROPERTY 7.3 APPLICATION OF PROCEEDS OF THE SALE 7.4 ENFORCING THE PERSONAL JUDGMENT 7.5 REDEMPTION IN A LIEN FORECLOSURE SALE 7.6 RIGHTS PENDING APPEAL Chapter 8 ARBITRATION AND BANKRUPTCY 8.1 ARBITRATION 8.2 BANKRUPTCY Bankruptcy Receivership And Mechanics Liens Chapter 9 POSITIONS OF THE VARIOUS PARTIES 9.1 THE OWNER 9.2 THE GENERAL CONTRACTOR 9.3 PROBLEMS OF THE SUBCONTRACTOR AND THE MATERIALMAN (1/10) TOC-9
10 Colorado Liens and Claims Handbook 9.4 THE ATTORNEY AND HIS OR HER PROBLEMS 9.5 WRITTEN CONFIRMATIONS Chapter 10 PUBLIC CONSTRUCTION PROJECTS 10.1 STATE OF COLORADO AND LOCAL GOVERNMENTAL SUBDIVISIONS IN THE STATE OF COLORADO Can One Claim A Lien On A Public Work? What Special Law Applies If The Colorado Mechanics Lien Laws Do Not? Does The State Public Works Law Apply To All Contracts Regardless Of Amount? What Protection Is There For One Who Supplies Labor Or Materials For A Public Works Project? Surety Bonds Substitution Of A Bond For Verified Statement Prompt Pay And Interest On Public Works Claims 10.2 THE PUBLIC WORKS CLAIM STATEMENT Is There A Way To Be Paid Without Suing The Surety? What Is Meant By Final Settlement? Once The Supplier Of Labor Or Materials Has Filed His Or Her Statement Regarding An Unpaid Claim With The Contracting Body, How Long Must The Money Be Withheld? Is There A Trust Imposed On The Public Entity To Withhold Funds? 10.3 SUING THE BONDING COMPANY What Is The Time Limit For Bringing An Action Against The Surety? Who May Bring A Lawsuit Against The Surety? Can One Obtain Interest When Suing The Surety On A Contractor s Bond? Can One Obtain Attorney Fees When Suing The Surety On A Contractor s Bond? What Is The Time Limit For Filing Suit? Can The Governmental Agency Pay The Withheld Funds Directly To The Claimant Without Further Action? TOC-10 (1/10)
11 Table of Contents May A Laborer Or Materialman Sue On A Performance Bond As Well As A Payment Bond? Public Works Claims And Complaints Venue 10.4 PLEADINGS AND TRIAL Discovery The Trial In General The Trial Special Requirements 10.5 PUBLIC WORKS CONSTRUCTION BONDS CLAIMS FOR LOST BONDING CAPACITY 10.6 TRUST FUNDS ON PUBLIC WORKS JOBS 10.7 EXCESSIVE CLAIM STATUTE Chapter 11 PUBLIC CONSTRUCTION PROJECTS: THE UNITED STATES OF AMERICA 11.1 PUBLIC CONSTRUCTION PROJECTS: THE UNITED STATES OF AMERICA Can One File A Lien Claim Against Real Estate Of The Federal Government? What Protection Is Offered To Persons Who Supply Labor And Material For Projects Carried On By The Federal Government? (The Miller Act) Can The Payment Bond Ever Be Waived By The Federal Contracting Officer? Can A Person Obtain A Copy Of The Payment Bond And, If So, How? Is One Required To Obtain A Copy Of The Bond Before Suing? Does The Amount Of The Contract Make Any Difference In The Procedures To Be Followed? Miscellaneous 11.2 SUING ON PAYMENT BONDS When Suing On A Federal Payment Bond, For What Sum Does One Sue? (1/10) TOC-11
12 Colorado Liens and Claims Handbook May A Laborer Or Materialman Sue On The Payment Bond? When Does The 90-Day Time Period Begin To Run? What Is The Time Limit For Bringing Suit On A Payment Bond? Where Must Suit Be Brought And In Whose Name? Can A Subcontractor Recover Attorney Fees And Costs On The Bond? What Happens If The Contractor Has Not Taken Out A Bond? In Order To Sue On The Bond, Must A Materialman Prove Delivery To The Federal Project Site As Well As Actual Use Of The Materials In The Construction? Miscellaneous 11.3 SPECIAL PROTECTION FOR LABORERS AND MATERIALMEN Must A Different Procedure Be Followed If The Laborer Or Materialman Has Dealt Directly With A Subcontractor But Has Had No Direct Contractual Relationship With The Contractor Furnishing The Bond? REVISIONS SUBJECT INDEX TABLES OF AUTHORITIES APPENDICES Appendix A Forms Appendix B Handy Checklist Time Limits Appendix C Mechanics Lien Statutes TOC-12 (1/10)
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