Home>Levelset Community>Legal Help>By filing a mechanic's lien against a property, does this prevent that owner from opening the property up for business until the lien is settled, in the state of Colorado?

By filing a mechanic's lien against a property, does this prevent that owner from opening the property up for business until the lien is settled, in the state of Colorado?

ColoradoMechanics Lien

We are a subcontractor and the owner is not paying our general contractor so in turn we are not getting paid. By the recommendation from our general contractor, we are filing a mechanics lien against the property. It is a hotel located in Denver, Colorado and I wondering if the mechanics lien will prevent the hotel's owner from opening up for business. Essentially, I am wondering if filing this mechanics lien will get us moving in the right direction towards getting paid, or if the owner of the hotel will not have any consequences and will be able to open up for business.

1 reply

Nov 29, 2018

That's a good question. As a general matter, a mechanics lien filing typically will not prevent the opening or operating of a business. Of course, that does not mean a mechanics lien won't work to get a claimant paid. Rather, when a valid mechanics lien is filed, that lien claim very typically will lead to payment - or at the very least, open discussions over the payment dispute. When a mechanics lien is filed, the lien encumbers the underlying property - making it very hard to sell the property or to take a loan against it. Though, even when a property isn't for sale or if the owner isn't looking for a loan, a lien can still be very effective to compel payment. This is because a lien claim poses an imminent threat to the property title - if a lien claim is filed and eventually foreclosed upon, the owner could lose their property. Thus, they're forced to deal with the issue, and a hard timeline is placed upon the situation - the owner must deal with the lien claim before the deadline to enforce the lien comes about. Once that deadline comes, the claimant will (usually) file a lawsuit to enforce their lien, and the owner's back is really put up against the wall. What's more, when there's a lender present on the project (and on large projects such as hotels, some form of lending is typically taking place) - lenders will often put pressure on the owner to resolve any disputes since a lien would put their investment at risk. In fact, lending agreements will often require an owner to resolve mechanics liens or other encumbrances as part of the terms of the loan. zlien has a great piece of content on this topic, which might help provide some more background on how liens get claimants paid: How Do Mechanics Liens Work? 17 Ways a Lien Gets You Paid. If you'd like more Colorado-specific information on mechanics liens, this should be a helpful resource: Colorado Mechanics Lien & Notice FAQs.

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