5 Mistakes when Filing a Colorado Mechanic’s Lien

If you’re a contractor, you expect to get paid for your work. A mechanic’s lien can be a powerful tool to help you collect money from clients who won’t pay. This lien can prevent the sale or refinance of the property until you’re paid. It can even allow you to foreclose on the property to get paid for your work. However, a mechanic’s lien can be complicated and is only effective when the proper process is followed correctly. You must follow specific rules to keep your Colorado mechanic’s lien valid. Otherwise, you’re holding onto a worthless piece of paper, and you could be responsible for fines and penalties for improperly filed liens

Avoid these five mistakes when filing Colorado Mechanic’s Liens.

Five Colorado Mechanic’s Lien Pitfalls to Avoid 

One: Not Filing on Time 

Mark your calendar on the day you stopped work on a project. If you only provided labor, then you have two months from that day to file your mechanic’s lien. If you (or your company) supplied materials and labor, then you have four months to file. If you file your mechanic’s lien form even one day late, you could lose your right to payment. So mark your calendar carefully.

Remember: You must file the lien with the county clerk and recorder’s office in the county where the property is located.

Two: Failing to Warn the Property Owner 

You cannot file a Colorado mechanic’s lien form without first giving advance warning to the property owner. Colorado law requires giving the owner 10 full days of advance notice before proceeding. You can satisfy this requirement with a Notice of Intent to Lien (NOI). Make sure you’ve marked the deadline for filing, and reach out to the owner 10 days before that date. This serves as a final warning and can often resolve non-payment issues without legal action.

Three: Exaggerating the Amount of Debt 

Be honest about how much you are owed. Overstating the amount of the unpaid bill can invalidate your lien and lead to costly consequences. For example, you could end up paying the other party’s legal fees. Keep an accurate, itemized bill and double-check those figures to make sure it’s the actual total amount.

Four: Overlooking the Details 

The details matter when you’re filing a powerful legal document against another person. Even if you think certain information is “too technical,” include it anyway. The most minor errors, such as inadequate property descriptions or signing blunders, can invalidate your lien. Take the time to carefully review your Colorado mechanic’s lien form before filing.

Five: Ignoring the Foreclosure Deadline

Once you obtain a statement of mechanic’s lien, Colorado gives you six months to act on it. In order to act on it,  you must enforce the lien (Hyperlink A).  Enforcing the lien is done by filing a lawsuit for foreclosure by the foreclosure deadline. If the property owner does not pay, you can foreclose on the lien. This involves selling the property at auction to recoup what you are owed. However, if you act too late and miss the deadline, you miss the opportunity to collect payment.

Bonus Advice: Know the Limits

There are certain limitations to the option of filing a mechanic’s lien.

There are limitations to a mechanic’s lien. Colorado, for one, does not allow contractors to apply this legal tool to public projects. Also, contractors need to be careful when going after private homeowners. The process can run aground and fail if the Notice of Intent is not properly served.

One more reminder: If you are found not following proper legal procedure when filing a mechanic’s lien, that can spell trouble. Not only could your lien be denied, but you’d also have to pay the property owner’s legal fees.

Better yet, hire an experienced contractor law attorney to handle these matters.

Want to Make Sure it’s Done Right? Lean on Us 

Your Colorado mechanic’s lien is literally only as effective as the party filing it. When one mistake can nullify all your efforts, you want to be sure your case is in good hands. You won’t find better hands than those of a seasoned mechanic’s lien attorney. At Robinson & Henry, we have the experience to file your lien correctly and efficiently. Call 303-688-0944 for an initial case assessment.