What are my property rights?

3 weeks ago

A pAinting contractor did not do a proper job and refused to fix issues. They left tools damaged property. I cancelled the second half of payment after they refused to come back. They wrote me that they just chose to not come back and to let it go. Told me to enjoy my basement. Then they texted me lien notice. It will cost me more to fix their damage than what I owed them. What rights does a property owner have in Colorado when a contractor doesn’t perform the work

Senior Legal Associate Levelset

If a contractor has performed work and gone unpaid for it, they’ll generally be entitled to file a mechanics lien claim. Granted, an owner can always challenge that lien if there’s some valid reason for the nonpayment. And, there are a few different ways a Colorado property owner can protect themselves against a mechanics lien filing.

Let’s look at a few distinct topics. But, before getting too far along, here’s a resource that seems relevant: I Just Received a Notice of Intent to Lien – What Should I Do Now?

Mechanics lien rights and payment disputes

First: Note that a claimant may file their mechanics lien even if there’s a dispute as to what’s owed, and even if there’s a dispute over the project’s workmanship. Of course, the mere filing of a lien doesn’t mean that lien is valid and enforceable. Recorders offices have neither the authority nor the bandwidth to investigate each claim that’s made. So, it’s entirely possible that an owner might have to challenge a filed lien and have it removed from their property.

But, at the same time – a mechanics lien claimant can’t file a valid and enforceable lien for work they haven’t actually performed. And, if there are defects in the work that was done, the cost of those defects may end up offsetting the lien claim.

How to fend off or dispute a Colorado mechanics lien filing

It can be hard to procedurally block a mechanics lien before it’s been filed. Still, it may be possible for an owner to convince their contractor to hold off on filing a mechanics lien. If an owner can show their contractor why their lien claim is bogus, that might be helpful.

Further, if the owner can show that they’e unafraid to vigorously contest the lien filing, and can show what penalties or costs the lien claimant could end up being responsible for, that could help do the trick. Nobody likes filing a mechanics lien claim – but they really won’t like that if they understand that the owner will fight the lien tooth and nail and take them to task on it.

In Colorado, a person who files an excessive lien will forfeit their lien rights and will be liable to the owner for the cost and fees associated with defending their property against the lien. And, it possible that an owner may be entitled to other damages, etc. if there are other causes of action tied in, too – like those regarding construction defects. So, informing a would-be claimant of what’s at stake might get them to back off some.

Bonding off a Colorado mechanics lien

Further, note that if a mechanics lien is filed, Colorado owners may bond off lien claims filed against their property, pursuant to CRS § 38-22-131. And, once a lien is bonded, it will be discharged from the property title. More on bonding off liens here: Primer on Mechanics Lien Bonds and Bonding a Mechanics Lien.

Bonding off a mechanics lien won’t make the payment claim just disappear – a claimant can still proceed with a lawsuit to enforce their claim against the bond, if they’d like. But, a mechanics lien bond does take the property title out of the equation. Plus, if a claimant wants to proceed with their claim, they’d need to file a lawsuit to do so – and, when a claimant knows their claim is flawed, they may be unwilling to proceed with a lawsuit due to the increased cost and risks.

As a result, an owner may be able to fend off a would-be lien claimant by threatening to bond off their claim, if one gets filed. And, if a lien filing does end up occurring, bonding off the lien may be a viable option.

Consulting a Colorado construction attorney can help determine how to proceed

At the end of the day, if it appears that a mechanics lien filing is imminent, consulting with a local Colorado construction attorney would be a smart move. They’ll be able to review all of the relevant documentation allegations of nonpayment and defective work and advise on how best to move forward with the dispute.

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