Filing the Lawsuit
If recording a lien doesn’t result in payment, you must file a lawsuit in order to enforce your mechanics’ lien rights. One of the most common misconceptions about Colorado mechanics’ lien law is that a lien will bind the project and the real property without you taking any other steps. This is not correct! Your mechanics’ lien will automatically evaporate if a lawsuit to foreclose on the lien is not filed within 6 months after completion of ALL work on the project. This is different than the time frame for filing the Statement of Mechanics’ Lien.
In addition, a notice called a Lis Pendens, Bradford form No. 137, must be filed with the County Clerk and Recorder within the same 6 month time period. Lis Pendens means lawsuit pending and it provides a warning to anybody who inspects the title to the real property that there is a lawsuit pending that affects the property.
What will it cost to file a lawsuit?
Lawsuits to foreclose on mechanics’ liens are quite complicated and most often an attorney is engaged to assure that the lawsuit is properly prepared and prosecuted. Hiring an attorney and pursuing a lawsuit to recover on your mechanics’ lien can be expensive. You must weigh the costs and benefits carefully before undertaking a lawsuit.
The costs for a mechanics’ lien foreclosure action can vary, depending on the number of parties involved, what issues are disputed, whether or not you have an attorney, and other factors. But the costs always include obtaining a foreclosure certificate from the title company, filing fees, and service of process fees. If the quality of your services or materials is challenged in the lawsuit, you may also need to hire an expert to testify on these issues. Experts are expensive and elevate the costs. The attorney’s fees are the largest unknown cost. A contested mechanics’ lien lawsuit over a large construction project can be very expensive.
Where do I file the lawsuit and how long will it take?
On larger construction projects, you may find that multiple mechanics’ liens will be recorded with the County Clerk and Recorder. If more than one mechanics’ lien claimant files a lawsuit on the same project, the lawsuits will generally be joined together with a single judge handling the consolidated cases. If this is the situation, the lawsuit would be brought to District Court to seek foreclosure on the mechanics’ lien. This will take quite a bit more time than if you’re a single claimant filing in a lower Court, because the Court in this case will need to determine two things: the validity and the amount owed to each of the lien claimants; and the “ranking” or priority of all of the persons who have a recorded interest in the property. Once the matter of ranking, validity and amounts are determined the Court essentially orders the real property and improvements sold at a public sale to the highest bidder. The proceeds of the sale are divided in accordance with the ranking established by the Court.
You always have the right to bring a suit on your contract with the owner or the general contractor. Such a suit may be brought in County Court or District Court. County Court proceedings are less expensive than District Court, and normally take no longer than 6 months from beginning to end. If the claim is worth more than $15,000 it must be brought in the District Court. County Court proceedings do not require you to hire an attorney, but having one is advisable. The County Court has a small claims division that handles matters of up to $7,500 in value, and no attorneys are allowed.
For information on how to file in small claims court, get Bradford’s book “Winning Big in Colorado Small Claims Court”. To understand the entire Mechanics’ Lien process, you will find Bradford’s booklet “Know Your Mechanics’ Lien Rights: A Guide to Colorado Law” , to be a helpful resource.