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what is a valid interest rate you can add to a mechanics lien?

ColoradoMechanics Lien

A construction company hired our services for hauling of construction material on a property they are building but haven't paid us for invoices from Jun and Jul of this year, totaling just over $53k. We recorded a lien but did not add interest rate to the amount due and are now wanting to correct this, but we do not know what is a valid interest rate we can charge.

2 replies

Nov 17, 2022

If your contract does not have a default interest rate (it really should), then under 38-22-101(5) you are entitled to receive interest on the lien at the rate of twelve percent per annum.

Remember, you have a limited time to foreclose on the lien. Moreover, especially if this is a commercial project, your attorney can consider other options under the law that could get this amount paid. Reach out to a construction attorney for a consultation today. They can also assist on reviewing and revising your contract/invoice terms form to protect your business. 

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Nov 17, 2022

I don't know the circumstances or the type of job we're talking about, but it seems based on your unpaid invoice dates that I'd be more concerned with what you intend to do with the lien than adding interest into the statement. Are you going to actually foreclose or file suit? I imagine you're running out of time there. Amending the lien to add interest doesn't resolve that issue. 

I believe in conservatively liening for the pure value of work performed. The mechanic's lien statute tacks on 12% in the absence of a contractual rate, which is awardable when you sue regardless of your lien statement. The lien, and the lis pendens, are primarily to give notice to third parties that there's a claim out there relating to the property. The lien is simply a precursor that gives you the right to pursue a certain kind of legal action. The question becomes, are you going to take action on the lien, or let it fall off, rendering any attempted amendment worthless in the first place?

Of course, there can be circumstances that make just having a recorded lien worth it to collect, but I don't have any relevant information from your question to make that determination. It may also be the case that you don't want to foreclose on this job, meaning your recourse is in contract or quasi contract.

Feel free to call our office to discuss. 7205007855.

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