We are in contract with the insurance company and if this sub liens on the property, we lose our contract. The total contract amount was $20,000.00 so $6,400. 00 seems quite a bit of extra work with zero explanation.
1 reply
Jan 31, 2019
I'm sorry to hear about that - it must be stressful. As you likely know, mechanics lien rights will only exist for amounts that are actually due and unpaid. Of course, plenty of payment disputes arise due to one party thinking they're owed more than their customer is willing to pay - and in those cases, often, lien claims can be filed that include that disputed amount. But as you'd mentioned above, a more than 30% increase in the cost of work is a substantial leap, especially without any documentation or explanation for the increase. First, it might be worthwhile to try and obtain background information into why the proposed lien claim so greatly exceeds the original price of the work. While there are a number of ways to fight a lien claim once it's been filed - it's hard to actually prevent one from happening in the first place. Though, threatening legal action if a lien claim is filed could help to fend off a claim - the penalties for filing a fraudulent lien can be substantial. Specificaly, under § 38-22-128 of the Colorado lien statute, a lien claimant who claims an excessive lien will both lose their lien rights and be liable for damages. So, warning the claimant that all efforts will be made to fight the lien and that they'll be liable for costs and attorney fees could help fend off an unreasonable lien claim. As far as dealing with a customer when a subcontractor may be filing a lien claim - it's hard to know what to do, and that will certainly depend on the parties involved (and more importantly, their temperaments). However, it might be helpful to warn an owner and/or their insurer that a subcontractor might be filing a lien claim - if done beforehand, it's possible to avoid the tempers that flare once a lien claim is filed, and they might be more receptive tot he explanation of the situation. Further, agreeing to secure a mechanics lien bond in the event that a lien is actually filed could go a long way toward calming down an owner or insurer - though that could also become an expensive endeavor.