The Benefits of Filing a Mechanics’ Lien in Colorado

Filed Under (Mechanics Liens) on 03-19-2012

Construction Lien, Statement of Lien, Lien, Mechanic Lien Forms, Mechanic Liens

If you haven’t been paid for work you did on a construction project, filing a Colorado mechanics’ lien is a potent weapon at your fingertips. There are few collection tools more effective in Colorado law than filing a mechanic’s lien.

A mechanics’ lien (sometimes called a construction lien) is a security interest in the title of a property for the benefit of those who have worked on the property. When it is recorded in county real estate records it attaches to the property. If your mechanics’ lien rights have been properly asserted, the property owner cannot sell any part of the property without clearing up the recorded and outstanding mechanics’ liens.

If your dispute is with a project under construction, the developer may not be able to get permanent financing if a mechanic’s lien is recorded against the project. That means the owner/ developer cannot sell the project or any units and cannot finance it. In short, filing a Colorado mechanic’s lien forces the developer to address your unpaid bills.

Which liens get paid first?

Under Colorado real estate law, liens, deeds of trust, and mortgages get paid in the order in which they were recorded. Colorado mechanics’ lien law says that mechanics’ liens are held as recorded as of the time that the first work began on the project. Architects, engineers, surveyors, or soil testing experts often complete the first work on a construction project and this type of preliminary work often occurs before the construction loan is put in place.

As a result, mechanics’ liens have priority over a deed of trust or mortgage recorded after the work was commenced and can take precedence over the construction loan. Because banks and lending institutions will not permit mechanics’ liens to be placed ahead of the deed of trust securing the construction loan, the mere recording of a mechanics’ lien will often cause the construction lender to pressure the owner or developer to pay their bills.

To learn more about mechanic’s liens, get Bradford Publishing’s helpful booklet, “Know Your Mechanics’ Lien Rights: A Guide to Colorado Law,” that will give you an overview of the legal process, and provide guidance and instructions about basic mechanics’ lien forms.