Home>Levelset Community>Legal Help>Can I file a mechanical lien on a cancelled contract that specifically states cancellation will incur "services" costs?

Can I file a mechanical lien on a cancelled contract that specifically states cancellation will incur "services" costs?

ColoradoRight to Lien

I have been a roofing contractor for 10 years. During this time we often work hail related insurance claims when available. Several times over the years I have went to great efforts in good faith in order to get a claim approved for a client only to learn that once that they got what they wanted, I was told to take a hike so they may pocket the insurance proceeds instead of using them to have the work done by me as originally agreed. As a result of this frustration I changed my contract last year to spell out several times the cancellation policy in this event. It clearly states, several times, that they understand that what we are providing is a "service", and that the service is NOT FREE in the event they cancel or breach the contract after said services have been performed in order to ensure their claim is approved. It is a contingency contract, that is binding and carries a 30% cancellation fee in order to deter people using us in this manner with no intent for compensation once they have received benefits. It also contains language that they give permission without question to place a mechanical lien on the property.and charge interest and collection fees until paid. There is additional language included such as; meeting of the minds with their insurance company, a time and date of completion, date of acceptance of contract, our legal address and theirs, scope of work to be performed and a clause required in Colorado referencing insurance rebating fraud. It is crystal clear what happens in this event they cancel and must pay for this labor/ service incurred. I've never had to file one yet but I'm wondering if this will go through if I do. I've also made them aware of my intent to enforce the contract via text message, phone call and paper deliver to principle place of business to the hot,e owner of which I have pictures. Please let me know if you think stick, as I have made it as clear as humanly possible in the contract to no longer be taken advantage of and have my time and services wasted in this manner.

1 reply

Oct 11, 2018
That's a creative way to combat the problem! I'm sure it's been frustrating to be taken advantage of. First, as a general matter, mechanics liens typically require that property actually be improved in order for lien rights to arise. There are some caveats, though. In Colorado, the general rule applies, for the most part - for contractors, subs, and suppliers, a filed mechanics lien must relate to work performed that has improved the property. However a mechanics lien may also be filed by "...architects, engineers, draftsmen, and artisans who have furnished designs, plans, plats, maps, specifications, drawings, estimates of cost, surveys, or superintendence, or who have rendered other professional or skilled service, or bestowed labor in whole or in part, describing or illustrating, or superintending such structure, or work done or to be done..." among others. So, whether or not a lien can be filed for cost estimates and proposed plans will likely depend on whether the claimant is considered an architect, engineer, draftsman, or artisan. Unfortunately, that is the only time the word "artisan" appears in the Colorado lien statute, so it's tough to determine who might be considered an "artisan" under the lien statute. Thus, it's tough to determine whether providing plan and/or estimate of price would suffice as grounds for mechanics lien rights. However, regardless of whether a valid mechanics lien might actually be filed, the threat of lien can be effective to compel payment since a mechanics lien is such a drastic remedy. Colorado is actually one of the few states that requires that a Notice of Intent to Lien (which is essentially a lien warning) be sent before a mechanics lien can be filed. Thus, by sending a Colorado Notice of Intent to Lien, a claimant might be able to both (1) preserve an eventual lien claim, and (2) compel an owner to make payment without the need for ever filing a lien claim. For more information on that document, this article from zlien should be helpful: What Is a Colorado Notice of Intent to Lien? Plus, the article has a free, downloadable template of the Colorado Notice of Intent to Lien form.
0 people found this helpful