Understanding Mechanics Liens in Colorado: A Homeowner’s Guide
If you own a home in Colorado and have recently completed construction, remodeling, or repair work, you may encounter something called a mechanics lien. These liens can be confusing, stressful, and have major consequences — such as preventing you from selling or refinancing your home.
In this guide, we will explain how a mechanics lien in Colorado works, walk you through the essential parts of Colorado lien law, and help you understand your rights under the Colorado mechanics lien statute.
What Is a Mechanics Lien in Colorado?
A mechanics lien is a legal claim placed against real property by a contractor, subcontractor, supplier, or laborer who has not been paid for their contribution to a construction project. The purpose of a lien is to secure payment: it ties the debt to the property itself. In Colorado, the rules governing mechanics liens are set out in the Colorado Mechanics’ Lien Act, codified at C.R.S. §§ 38-22-101 to 38-22-133.
Under the statute, virtually anyone who provides labor, materials, or services that permanently improve real property may be entitled to file a lien if they are not paid. However, mechanics liens are technical remedies — meaning that lien claimants must strictly comply with the requirements and deadlines set out in Colorado mechanics lien law.
For homeowners, it is critical to understand the lien process, because once a lien is recorded, it can encumber the title to your home and complicate future transactions.
How a Mechanics Lien Is Filed: Deadlines and Notices
Before someone can file a lien against your property, Colorado lien law requires them to take specific preliminary steps to give you an opportunity to resolve the dispute.
First, the lien claimant must serve you with a Notice of Intent to Lien at least ten days before recording the lien. This notice alerts you that a lien is about to be filed and gives you a chance to settle the issue (C.R.S. § 38-22-109(3)).
If no resolution is reached, the lien claimant must then file a lien statement with the county clerk and recorder’s office. For most residential construction projects, the lien must be recorded within four months after the last day labor was performed or materials were supplied to the project (C.R.S. § 38-22-109(5)).
After the lien is recorded, the claimant must then enforce it by filing a lawsuit within six months of the project’s completion (C.R.S. § 38-22-113). If the claimant misses this deadline, the lien becomes unenforceable by operation of law.
It is important for homeowners to note that these timeframes are strict. Minor mistakes can invalidate a lien, which can be a strong defense if you find yourself facing a lien threat.
Homeowner Defenses Under Colorado Mechanics Lien Statutes
Fortunately, the Colorado mechanics lien statute includes important protections for homeowners, particularly those who have acted in good faith.
One of the most important defenses available is the full payment defense. Under C.R.S. § 38-22-109(10), if a homeowner of an owner-occupied single-family dwelling has fully paid their general contractor for the construction work, subcontractors and suppliers generally cannot file valid mechanics liens against the property. This protection ensures that homeowners who honor their contracts are not penalized if their contractor fails to pay subcontractors or material suppliers.
To successfully assert this defense, homeowners should maintain complete records of payments made to the general contractor, including canceled checks, bank records, and payment applications.
In addition, if you discover that a lien has been filed against your home, you are not stuck. Colorado law gives homeowners the right to bond around the lien, effectively removing it from their property title. Under C.R.S. § 38-22-131, a homeowner can post a surety bond (usually one and one-half times the lien amount) with the court. Once the bond is in place, the lien is discharged from the property, and the dispute continues against the bond instead of tying up your home.
This procedure is especially important if you need to refinance or sell your home and cannot afford to wait months or years for the lien dispute to resolve.
The Contractor's Duty to Protect Your Payments
Beyond lien defenses, homeowners also benefit from additional protections under Colorado's trust fund statute, C.R.S. § 38-22-127. This statute requires contractors to treat payments from homeowners as trust funds and use them to pay subcontractors, laborers, and material suppliers associated with the project.
If a contractor misuses your payments — for example, by diverting funds to unrelated expenses or personal use — they may be personally liable to you and can even face criminal prosecution. The trust fund statute gives homeowners an avenue to seek restitution and to potentially recover damages for mishandled project funds.
What Should a Homeowner Do If a Mechanics Lien Is Threatened or Filed?
If you receive a Notice of Intent to Lien or learn that a lien has been filed against your home, it is crucial to act quickly. Here are some steps to consider:
First, review your payment history. If you can demonstrate that you paid your contractor in full, you may have an immediate defense under C.R.S. § 38-22-109(10).
Second, communicate with the lien claimant. Some lien disputes can be resolved with documentation showing payment or other defenses. Early resolution can often avoid the need for court intervention.
Third, consider bonding around the lien. If you need to sell, refinance, or otherwise clear your property title, posting a bond under C.R.S. § 38-22-131 can provide fast relief without conceding liability.
Finally, consult legal counsel. Even seemingly simple lien issues can escalate quickly, and having a knowledgeable attorney on your side ensures you don’t miss critical deadlines or defenses.
How to Prevent Mechanics Liens in Colorado
Prevention is the best defense when it comes to mechanics liens. Homeowners can take several proactive steps:
Use a Written Contract: Always require a detailed written contract that includes a scope of work, payment schedule, and lien waiver requirements.
Request Lien Waivers: At every payment stage, require your contractor to provide partial lien waivers from themselves and their subcontractors. At final payment, request a full unconditional waiver.
Pay Attention to Notice Requirements: If you receive a Notice of Intent to Lien, do not ignore it. Prompt action can prevent a lien from being filed.
Verify Contractor Payments: Consider paying subcontractors and suppliers directly or requiring proof that subcontractors have been paid before issuing progress payments.
By staying vigilant during the construction project and immediately responding to any signs of payment disputes, homeowners can significantly reduce the risk of facing a lien.
Conclusion: Protecting Your Home Under Colorado Mechanics Lien Law
Mechanics liens are a powerful tool under Colorado lien law, but homeowners are not powerless. By understanding the deadlines, defenses, and procedures outlined in the Colorado mechanics lien statute, you can better protect your property and avoid costly disputes.
If you are facing a mechanics lien threat or dealing with a filed lien, it is important to act quickly and strategically. Whether it is asserting the full payment defense under C.R.S. § 38-22-109(10), bonding around a lien under C.R.S. § 38-22-131, or pursuing remedies under the trust fund statute C.R.S. § 38-22-127, knowing your rights can make all the difference.
If you need help navigating a lien issue, our firm stands ready to assist Colorado homeowners with lien defense, lien removal, and construction dispute resolution. Contact us today to learn more about how we can protect your home and peace of mind.
The information provided on this website is for general informational purposes only and should not be construed as legal advice or legal opinion. You should not act or refrain from acting on the basis of any information provided on this website without seeking legal advice from an attorney.