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Home>Levelset Community>Legal Help>Based on CO lien law & statute of limitations are we able to file a letter of intent and Mechanic's Lien on the entire job?

Based on CO lien law & statute of limitations are we able to file a letter of intent and Mechanic's Lien on the entire job?

Colorado

We sold material for a job to two separate customer's. The first customer we last shipped material on 3/26/19 and was fired from the job by the builder. The second customer took on the job & we last shipped on 6/26/19 and we have another $41K in open orders. The first customer said the builder is not paying them & so we are not being paid. The second customer seems to be paying. We want to salvage the relationship with the second customer but we are concerned with getting paid for all invoices. Your advice would be appreciated.

1 reply

Jul 2, 2019
That's an interesting question, and I'm sorry to hear that you've had some payment issues on this job. I should mention that I'm not able to provide legal advice for your situation, but I can provide some information that should be helpful in deciding how best to proceed.

Before deciding whether to send a document like a Notice of Intent to Lien, it might be a good idea to first inform the current customer about the payment dispute with the previous company. That way, they won't be caught off guard and they'll understand that the payment issue is with the previous customer, not them. If a threat is made to lien the property without the customer's prior knowledge, it might be hard to calm everyone down to explain the situation. Plus, the customer may be able to help smooth things over with the owner if they've got a good relationship in place.

Further, it might also be beneficial to explain the situation to the owner first. If the owner is unaware that their refusal to pay a prior contractor is causing their current supplier payment trouble, they might be amenable to directly paying the supplier for materials furnished to the job. And, if they refuse, at least it's easier to know where everyone stands.

As for whether a Notice of Intent to Lien might sour relationships...
No owner, contractor, or sub likes when a lien is filed on the project. Certainly, sending a document like a Notice of Intent to Lien could affect relationships. But, when genuine efforts have been made to resolve the problem, and when payment problems persist, sending a lien warning like a Notice of Intent might become necessary. With additional work on the job, that could definitely affect relationships for the remainder of the project in a negative way, but it's up to each business to determine whether the risk of nonpayment is worth ruffling some feathers.

As for timelines...
The Colorado mechanics lien statute doesn't provide much insight into how a lien deadline would operate for a material supplier who supplies two separate customers on the same project. CRS § 38-22-109(5) establishes the lien deadline as "four months after the day on which the last labor is performed or the last laborers or materials are furnished by such lien claimant." Typically, there's only one customer on the job so it's obvious that the lien deadline simply runs from the last furnishing date. But, when there may be two different dates for completion of work - that can certainly add a layer of complexity. Ultimately, though - that section of the Colorado Revised Statutes seems to contemplate the claimant's completion of all work on the project. Thus, the deadline for sending a Notice of Intent to Lien and for filing a mechanics lien claim both would conceivably run from the last date the claimant performed any work or provided any material to the project.

If that's the case, then payment claims might be able to be saved until the end of the project - avoiding dispute with a fair-paying customer. However, because there's some ambiguity, it might be a safer idea to assume that the deadline for sending a Notice of Intent and filing a lien would run from the completion of the original work provided to the project.
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