Home>Levelset Community>Legal Help>I would like to know the specific statute that requires a contract if a project is over $500 for the mechanics lien.

I would like to know the specific statute that requires a contract if a project is over $500 for the mechanics lien.

Our contractor did a poor quality job with items left unfinished, or damaged. We have offered him the options of coming back to finish the work properly or to accept a lower final payment based off of the out of pocket expenses we will incur for the repair/finish of the work. He is now saying he’ll file a lien on our home. We do not have a contract and the original agreed upon price was $3793 and we offered him $3100 to settle. It was our understanding that at that price he’d need a contract for the mechanics lien to be valid in Colorado. Is this correct? We need the exact statute and also the process for contesting the lien. Thanks,

1 reply

Oct 17, 2019

CRS § 38-22-101 sets out who is entitled to file a Colorado mechanics lien. CRS § 38-22-101(2) states that, where there's a contract, the lien will extend to the entire contract price. And, CRS § 38-22-101(3) continues "All such contracts shall be in writing when the amount to be paid thereunder exceeds five hundred dollars..." So, seemingly, contracts for work should be in writing if that work will exceed $500. Note, though, that the Colorado mechanics lien statute doesn't explicitly state that, if not in writing, the right to file a mechanics lien is completely lost. Plus, the beginning of CRS § 38-22-101(2) ("In case of a contract for the work...") makes it seem that a Colorado mechanics lien might, in fact, be possible without an explicit contract in place. Contesting a Colorado mechanics lien First, it's worth mentioning that sending a demand letter which demands a lien be released, or else legal action will be sought, can be helpful - particularly when there's a questionable basis for the lien claim. Sending a letter which alleges specific damages and/or certain actions which will be taken can be a good first step in challenging a lien. In terms of an actual challenge, Colorado property owners can contest a filed mechanics lien via legal action which alleges the lien filing is flawed or otherwise invalid and unenforceable. It seems like filing a quiet title action is a common way to combat Colorado lien claims. Another option when contesting a lien may be to bond off that lien filing. CRS § 38-22-131 allows a property owner to bond off a mechanics lien that's been filed against their property. And, once that bond is secured and approved by a judge of the district court, the filed lien will be discharged from the property. After that, any legal action on the claim will be brought against the bond rather than putting the property title in jeopardy. But, when a mechanics lien has been filed, the stakes are high. When looking to challenge a filed lien - either via legal action or by bonding off the filed lien - it's a good idea to first consult a local construction attorney. They'll be able to review your situation and advise on how best to move forward.

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