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Is the Notice by Disburser still a valid document in the state of Colorado?

This documents referenced in Section 126, Article 22, Title 38, of the Colorado Revised Statutes specifies who will receive funds from a construction loan. Can you advise how this affects lien rights if at all. It may be an outdated document. Thank you in advance.

2 replies

Apr 19, 2021

Good afternoon, A notice to disburser is an entirely separate notice and has no effect and no relation to mechanic's liens rights. The law is in effect. If the lien claimant provides proper notice per the statute the disburser is required to determine the amount due and pay that amount directly to the claimant of of undisbursed funds, rather than to the principal contractor. The contents of the notice and the service of the notice along with the applicable facts as to the deal are critical. You should speak with an attorney before you consider a notice to disburser so it is done correctly.

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Apr 21, 2021

Notice of disburser notices are filed to put the lender on notice that a trade/supplier has done work on the project and that any loan proceeds that are designated for that trade/supplier, must be paid. There is much litigation about what the lender’s obligations are, once it pays a general contractor for specific work. The better route is to file a disburser notice which then obligates the lender to ascertain the amount due and pay that amount directly to the claimant out of any undisbursed funds available. The fight usually occurs once a contractor objects that the is defective work, in which case the lender will simply withhold funds in question.

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