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mechanic's lien

ColoradoMechanics Lien

I have had two mechanic's liens with intent to file thrown at me this week by two different subcontractors whom were not paid by my builder. I closed on my house well over a month ago and had a land title company close the property and there were not liens by these folks at that time. I paid the builder for the house. I had no idea they did not get paid. Now they are directed at me. I paid for the house with no issues. Now what do I do? The builder has now filed bankruptcy. what is my options. I closed on those are they not supposed to go after him and not me and my property that i just purchased?

1 reply

Oct 1, 2019
Mechanics liens are encumbrances on property (the property improved pursuant to a construction project) itself, not the owner, contractor, or any other individual contracting party. Ultimately, if a lien is valid and enforceable, the property owner will need to satisfy it, however, or the property may be foreclosed and sold to satisfy the debt. In some states, liens are limited to the "unpaid balance" left on the prime contract, such that if the original contracting owner has paid the GC in full, no liens can attach. This is not specifically the case in Colorado which is a "full price" lien state in which unpaid participants may file a lien and force double payment from the property owner or GC to the full extent they are unpaid. There are, however, many specific requirements that must be met in order to file a valid and enforceable lien in Colorado. There are notice requirements, formal requirements, and deadline requirements, just to name a few. Specifically, a notice of intent to lien must be provided to the property owner at least 10 days prior to filing a lien claim, and the claim itself must be filed within 4 months after the claimant last furnished labor or materials to the project. Since a notice of intent to lien has been received, but the lien not yet filed, there may still be time to open channels of communication in an attempt to avoid a lien filing and work through the payment discrepancy. It is likely worth reaching out to the potential lien claimants in order to learn about the payment issue, and see if there is anything that can be done to avoid the lien claim - other than just noting the bill and attempting to recover from the responsible party, since the builder has filed for bankruptcy protection. Since it is generally thought that the property owner is in the best position to oversee the flow of money on a project, is the party who ultimately gains the benefit of the work being provided, and has the largest interest in the property, the ultimate responsibility for the claims usually flows up to him/her. This can mean that in some cases, the property owner can be forced to double pay. While the GC / developer would be a required party in a foreclosure suit, if they have filed bankruptcy the debt may be unrecoverable from them. It's an unfortunate consequence of mechanics liens that, since they follow the property, they can sometimes obligate "innocent" parties to make payment that is not properly their responsibility. It is possible, however, that: 1) there may be some way to avoid the liens if communication with the potential lienors is initiated; or 2) that the liens will not be filed, or will have some deficiency if filed through which the lien could be fought and ultimately removed. Additionally, liens must be enforced within a certain period of time or they are extinguished. If the amounts at issue are small, the claimants may not want to actually proceed with the time and potential expense of litigation.
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