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Is this a fraudulent lien claim?

I have paid a contractor for work and the contractor is refusing to finish the job until payment is made in full for work yet to be completed. Now the contractor is going to file a lien against the property for my refusal to pay in full before the work is completed. Is this a fraudulent claim? Thanks

1 reply

Nov 20, 2019

Colorado mechanics lien claims are generally available for work that's been done but not paid for. And, a claim for work that's not yet been completed may well end up being deemed invalid and unenforceable - or even excessive or fraudulent. However, keep in mind that just because a mechanics lien is improper or even overstated won't automatically render it "excessive" or "fraudulent." Levelset discusses that idea in detail here: Frivolous Mechanics Liens: Intentionally Fraudulent vs. Honest Mistakes.

When is a Colorado mechanics lien deemed "excessive?"

Colorado has a relatively low bar for determining whether a lien claim is excessive. Looking to Colorado's mechanics lien statute, specifically, excessive lien claims are governed by CRS § 38-22-128. Under that section, a lien is excessive if it’s more than what could reasonably or possibly be due, and if the claimant knowingly filed the lien for more than what is due. So, a lien claimant who knowingly files a mechanics lien for work that's not yet been done will generally run afoul of CRS § 38-22-128. And, as a result, they might forfeit all rights to their lien claim and be responsible for the amount equal to the costs and attorney fees incurred by the owner having to fend off the lien claim.

Payments should be made in accordance with the contract

Finally, keep in mind that payments should generally be made in accordance with the payment terms and schedule of the contract - regardless of whether a lien claim would be premature or excessive. So, if the contract calls for payment before the work has been completed - payment should generally be made, even if a lien claim might be premature at that time. Or, if the terms of the contract call for payment after that work is done, an owner is entitled to wait until then to make payment - and pointing to the contract terms might help convince a contractor to do the right thing.

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