The construction company I hired went bankrupt without my knowledge, they also failed to pay the supplier…an extended lien is being placed on my property. I have paid the contractors but they failed to pay the suppliers. I had no knowledge of their non payment to the suppliers.What are my options, I cannot afford to pays thousands of dollars to remove the lien especially when I have paid the contractors for work that has yet to be complete.
I’m sorry to hear about that – that must be horribly frustrating. Some states limit the amount of a sub or supplier’s mechanics lien filing, depending on what the owner has paid their prime contractor. However, in Colorado, a subcontractor or supplier will be entitled to file a mechanics lien for the full amount of what they’re owed and unpaid, regardless of what has been paid to a prime contractor. So, even in a situation where a prime contractor has been paid in full – if payment wasn’t passed down to their subs and suppliers, then those subs and suppliers may be entitled to file a completely valid mechanics lien.
Levelset has actually discussed some of those options in this article: A Mechanics Lien Was Filed on My Property – What Do I Do Now? Still, let’s talk about some options for potentially fending off or removing a mechanics lien that’s been filed on the project property.
First, it might be helpful to discuss the matter with the lien claimant. If they understand exactly what’s happened to cause the payment issues, it might be easier to come to some other arrangement or to at least take some of the venom out of the dispute. Of course, where a lien claim has already been filed, it might be a good idea to consult a construction or real estate attorney first in order to avoid potential issues that might be created by discussing the debt with a lien claimant.
Further, it’s also generally a good idea to look into whether the claim itself is valid – be that due to some issue with the claim itself, or to some procedural issue. It’s not uncommon for a lien claimant to overstate what they’re owed or for them to include improper costs and fees in their claims. If they have, it may be easy to have the amount of the lien reduced, or in some cases, the lien could even be invalidated altogether. What’s more, Colorado has a strict Notice of Intent to Lien requirement – so, the first time an owner hears about a potential lien claim shouldn’t be when the claim is actually made. So, if the Notice of Intent wasn’t sent prior to when the lien claim was made, the claim might not be valid. Finally, mechanics liens have strict deadlines, themselves – so if the deadlines weren’t properly adhered to, it might be easy to remove a claim. More on that Notice of Intent to Lien document here: What Is a Colorado Notice of Intent to Lien? And, for more on deadline and other procedural requirements, here’s a good resource: Colorado Mechanics Lien Overview.
While it may be a costly option, under CRS § 38-22-131, an owner can also bond off a filed lien. By doing so, the lien will be removed from the property title – but it still must be dealt with (potentially, by legal action).
Finally, an owner can always fight a filed lien with the threat of legal action, or by actually pursuing that action. As discussed above, there are a whole host of reasons that could render a mechanics lien improper or unenforceable. While paying for an attorney might be costly, if the lien claim will be battled, a construction attorney’s guidance will likely be necessary. They’ll be able to review the circumstances and documentation and advise on the best options for proceeding.