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Lien on property by sub contractor

In Colorado can a sub contractor who has no verbal or written agreement with the owner demand payment via a lien for additional work beyond the initial contract when he was merely requested by the General Contractor to do the "punch list" without any change order to the original contract? Ray Cartade

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Sep 26, 2019

Hi Ray. Yes - Colorado subcontractors are able to file a mechanics lien against the project property when hired by someone other than the owner - like the general contractor. This is true even when there's a dispute as to what's owed. Of course, a claimant cannot exaggerate their lien claim or pursue a fraudulent lien. But, if there's an honest dispute, the amount may be lienable (initially, at least). Colorado law actually requires that a Notice of Intent to Lien be sent at least 10 days before a mechanics lien can be filed, so receipt of a Notice of Intent to Lien may well be a sign that a mechanics lien will soon be filed. But, ultimately, the notice is a positive thing - at least it provides time to sort out the issue before a lien filing actually occurs. What amounts are lienable? There are certainly limits to what amounts are subject to a mechanics lien filing. Generally, a lien claimant will be limited to the amount they're owed for the work they've performed, but only where that work is actually authorized. Now, that doesn't mean a sub must get the OK from the property owner for their work. Rather, that authorization can also be made by the GC on the owner's behalf. But, all work done on a project must fall within the scope of the project - set by the owner and the GC - in order for the work to give rise to lien rights, regardless of who's done the work or who will file the lien. Generally, punch list work will not give rise to separate rights to payment. Rather, it represents remedial work that a contractor or sub must perform in order for their work to be considered "complete" under their contract. However, if a subcontractor is asked to go outside their planned scope of work, it's possible that the work might rise to the level of a change order. But, if the change order wan't properly documented, then even a valid argument for payment might not be lienable. More on that here: Change Order Form — Free Template Download and Best Practices. Finally, note that CRS 38-22-128 protects owners from mechanics liens filed for excessive amounts. Under that section, if a claimant files a mechanics lien for more than what they're owed, they may lose their right to lien and actually be liable to the owner for costs and attorney fees, as applicable, that are incurred as a result of the lien claim. Plus, an owner may also be able to pursue a slander of title action or other damages they incur from a faulty mechanics lien. What to do after receiving a Notice of Intent to Lien Receiving a Notice of Intent to Lien can be jarring for an owner. We've actually written about that before: I Just Received a Notice of Intent to Lien – What Should I Do Now? Of the steps discussed in that article, perhaps the most important is getting with the general contractor to get to the bottom of the issue, and to make sure that the contractor is ready to resolve the issue with their subcontractor. Reminding a contractor that the prospective lien claim is their responsibility to clear up may be enough to get them to resolve the issue, but note that owners can generally bring their contractors into a legal dispute that results from the contractor's failure to make payment. Taking things a step further, requiring that a contractor bond off any filed mechanics liens might be an option, too.

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