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Home>Levelset Community>Legal Help>Working in Colorado, which is one of two states that have a non lien clause which the landlord prohibits liens.

Working in Colorado, which is one of two states that have a non lien clause which the landlord prohibits liens.

Colorado

We are looking to do work in a center which has a non lien clause. How do I protect myself if our client does not pay? "NEITHER CONTRACTOR NOR ANY SUB CONTRACTOR SHALL FILE ANY MECHANIC'S, MATERIALSMEN'S, OR OTHER LIENS EITHER AGAINST THE LEASED PREMISES OR THE SHOPPING CENTER FROM ANY WORK, LABOR, SERVICES OR MATERIALS SUPPLIED OR PREFORMED BY CONTRACTOR OR BY AN SUB-CONTRACTOR. CONTRACTOR HEREBY AGREES TO INDEMNIFY, SAVE AND HOLD HARMLESS LANDLORD, ITS AGENTS AND EMPLOYEES, ASSIGNS AND ARCHITEXTS OF AND FROM ANY AND ALL COSTS OF ANY NATURE, INCLUDING WITHOUT LIMITATIONS INVESTIGATIONS, ADJUSTMENT, ATTRONEY'S FEES, EXPERT'S FEES, COURT COSTS, ADMINTTRATIVE COSTS, AND OTHER ITEMS OF EXPENSE ARISING OUT OF ANY MECHANIC'S, MATERILAMEN'S OR OTHER LIENS FILED AGAINST EITHER THE LEASED PREMISES OR THE SHOPPING CENTER BY CONTRACTOR OR BY ANY SUB CONTRACTORS"

2 replies

Nov 2, 2022

It depends on how negotiable that contract is. There are arguments against these types of provisions, but arguments mean uncertainty in litigation. There are also ways to ensure you aren't performing work without being paid by modifying the contract. I'd need to see the whole contract and know the circumstances of your negotiations.

The shortest answer to this is that the cited provision arguably affects only your lien rights. That provision does not mention indemnity for contract and/or quasi contract claims, which might allow you to recover. That assumes there won't be a shell game of entities owning vs contracting, which can complicate recovery in contract.

You should do your homework on whomever you're contracting with.

Feel free to contact the office to discuss in more detail. 7205007855.

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Nov 2, 2022
Great question. Lien rights and lien language get a great deal of well-deserved attention, however, a lien is only one tool for a contractor to secure payment or minimize the risk of non-payment. It is best to evaluate and improve the entire contract ecosystem from (1) pre-bid/quote/estimate to (2) contract award to (3) project management to (4) post-completion. Payment bonds, payment terms (timing, amount, percentage down, progress payments, retainage, identification of proper legal entity and responsible party for payment, etc.), and corporate & personal guarantees are among other tools. On large-scale projects with international companies, the trend is for greater emphasis on Letters of Credit as a payment tool. There can be contract language incorporated into the contract or added as an addendum beyond what a "master contract" states. Common law & case law remedies, statutory remedies, and contractual remedies should be evaluated in addition to possible lien rights. Each situation calls for its own analysis. Please reach out to me for discussion regarding specific situations.
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