Payment Disputes & Mechanic's Liens

Few documents are as alarming to a Colorado homeowner as a Notice of Intent to Lien or a recorded mechanic's lien against their property. A lien can cloud title, derail a refinance or sale, and — if left unaddressed — lead to a foreclosure action.

The good news is that many liens recorded against Colorado homes are procedurally defective, factually overstated, or asserted by claimants who lack the right to lien in the first place. We represent homeowners on the receiving end of these claims and help them respond strategically rather than reactively.

How Mechanic's Liens Work in Colorado

Colorado's mechanic's lien statutes (C.R.S. § 38-22-101 et seq.) give contractors, subcontractors, suppliers, and certain other parties the right to record a lien against real property for the value of labor or materials furnished to improve that property. The statutes also impose strict procedural requirements — notice, recording, and enforcement deadlines — that claimants must follow precisely. When those steps are skipped or mishandled, the lien may be unenforceable, even if money is genuinely owed. For a homeowner-focused walkthrough, see our Colorado mechanic's lien guide for homeowners.

Notice of Intent to Lien

Before recording a lien, a claimant must serve the property owner with a written Notice of Intent to file a lien at least 10 days in advance (C.R.S. § 38-22-101(3)). Service must comply with the statute and the notice itself must contain specific information. Defective notice is a common ground for challenging an otherwise valid lien. More detail in our article on the Notice of Intent to Lien.

Recording Deadlines

For most claimants on single-family residential projects, the Statement of Lien must be recorded within four months after the last work or materials were furnished (C.R.S. § 38-22-109). General contractors have a longer window. Liens filed outside these deadlines are subject to dismissal regardless of the merits of the underlying debt. Our article on Colorado's four-month lien deadline covers the mechanics in detail.

Enforcement Deadline

After recording, the lien claimant must commence a foreclosure action within six months after the last work or materials were furnished, or within six months after completion of the structure or other improvement — whichever is later (C.R.S. § 38-22-110). If the claimant misses this deadline, the lien expires as a matter of law and the homeowner can have it released from the record.

When a Lien Is Defective or Improper

In our experience, a substantial portion of recorded liens against Colorado homes have one or more of the following problems:

• No Notice of Intent was served, or the notice was defective

• The lien was recorded outside the four-month window

• The claimed amount includes work the homeowner never authorized

• The claimant lacked a required state or local license

• The work was defective and the lien amount does not account for the cost to correct it

• The homeowner has already paid the general contractor in full — triggering Colorado's full-payment defense

These issues are not technicalities. They are statutory requirements designed to protect homeowners. See our articles on why many recorded liens are invalid, inflated invoices and excessive lien amounts, liens by unlicensed contractors, and liens tied to defective performance for more detail on each.

Excessive Liens and Civil Theft

Colorado law penalizes claimants who knowingly record a lien for an amount greater than is due. Under C.R.S. § 38-22-128, an excessive lien forfeits all lien rights and exposes the claimant to liability for the homeowner's costs and attorney fees in challenging it. Separately, when a contractor diverts funds the homeowner paid for labor and materials to other projects or personal use, the Construction Trust Fund statute (C.R.S. § 38-22-127) and Colorado's civil-theft statute (C.R.S. § 18-4-405) allow recovery of treble damages and attorney fees. These provisions matter most when a homeowner has paid in full but subcontractors or suppliers are claiming liens because the general contractor did not pass payment through.

The Full-Payment Defense

Colorado's full-payment defense (C.R.S. § 38-22-102(3.5)) protects homeowners who have paid their general contractor in full from being liened by unpaid subcontractors and suppliers, subject to certain notice and documentation requirements. When the defense applies, the homeowner cannot be forced to pay twice for the same work.

Bonding Around a Lien

If a homeowner needs to clear title to refinance or close a sale while a lien dispute is unresolved, Colorado law allows the lien to be "bonded around" — substituting a surety bond for the property as security for the disputed amount. Our article on bonding around a mechanic's lien in Colorado explains how this works and when it makes sense. Bonding around does not resolve the dispute, but it removes the lien as an obstacle to a transaction while the underlying claim is litigated or negotiated.

If Foreclosure Is Threatened

A mechanic's lien is ultimately enforced through a foreclosure action filed within the statutory window. Even homeowners who believe the lien is defective should respond promptly to a foreclosure complaint; failing to answer can result in a default judgment and a forced sale. Our article on responding to a mechanic's lien foreclosure action walks through the timeline and the most important early steps.

How We Handle Lien Defense

Our approach to defending a Colorado homeowner against a mechanic's lien is direct and disciplined. In a typical case, we:

• Verify the lien's procedural validity — Notice of Intent, recording date, claimant capacity, and any required licensing.

• Audit the claimed amount against the contract, change orders, invoices, payment records, and the cost to correct any defective work.

• Identify available statutory defenses, including the full-payment defense, excessive-lien remedies under § 38-22-128, and trust-fund / civil-theft exposure for diverted payments.

• Coordinate bonding around the lien when needed to preserve a closing or refinance.

• Negotiate, litigate, or defend a foreclosure action — and pursue fee recovery where the statute allows it.

Talk With Us

If you have received a Notice of Intent to Lien, a recorded lien is clouding your title, or a contractor or subcontractor has threatened a foreclosure action, the earlier we can evaluate the claim, the more options you have. Consultations are free, confidential, and carry no obligation. Call us at (303) 276-2647 or schedule a consultation online.