Who Can File a Mechanics Lien in Colorado?
When we look at who can file a mechanics’ lien in Colorado, we can answer this question by stating those who are eligible is any person or company that makes an improvement to real property. We say real property to clarify that we are talking about land, buildings, and other improvements to real estate, and not personal property such as a car or truck.
What constitutes an improvement to property will be look at in more detail below, but the definition is fairly broad. The improvement does not need to be realized. For example, if an architect is paid to draw up plans for a new build and the property owner ultimately chooses not to use the plans, the architect still has the option to file a mechanics’ lien if they are not paid.
Mechanics’ liens in Colorado are a creature of statute. As attorneys, we first look to the statutes to get a foundational understanding of what the law allows and the requirements that must be met. As an example, take a look at a portion of the primary statute covering mechanics: liens:
A mechanic’s lien statute . . . must be strictly construed in determining the question as to whether the right to a lien exists. Where the inquiry is whether a person asserting a lien or the work for which he claims it, comes within the statutes, or whether the statutory requirements necessary to initiate the lien have been complied with, the statute must be strictly construed. . . . Only those persons to whom the statute plainly or expressly gives the right to a lien, can acquire it.
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General and Sub-Contractors
General contractors and subcontractors are the primary beneficiary of the mechanics’ lien statutes in Colorado. Since these two categories perform the vast majority of work on construction projects, the law in Colorado protects them. Here is a snippet of the law covering this issue:
contractors, subcontractors, builders, and all persons of every class per- forming labor upon or furnishing directly to the owner or persons furnishing labor, laborers, or materials to be used in construction, alteration, improvement, addition to, or repair, either in whole or in part, of any improvement shall have a lien upon the property.
Day Laborers and Workers by the Day
Persons who perform the actual work are entitled to a mechanics’ lien if they do not get paid. This includes those persons who are not paid by their company, such as a subcontractor. Even if the property owner pays the subcontractor, if the sub does not turn around and pay their workers, the workers are then able to lien the property. While this certainly seems like a liability that can loom for months on end, it is very unlikely a worker is educated on the law enough to move forward with a lien.
Designers, Engineers, and Architects
Those in the design, engineering, and architectural fields have the same rights as general and subcontractors. If they provide professional services that could result in an improvement to the property, they have a valid right to mechanics’ liens. As mentioned above, the improvement does not need to be realized before a lien right exist. The services only need to be perform by the professional as contracted for with the property owner. If the owner ultimately chooses not to use engineering plans for example, it is wholly irrelevant for purposes of the lien right.
Here is the snippet from the applicable Colorado statute:
architects, engineers, draftsmen, and artisans who have furnished designs, plans, plats, maps, specifications, drawings, estimates of cost, surveys, or superintendence, or who have rendered other professional or skilled service, or bestowed labor in whole or in part, describing or illustrating, or superintending such structure, or work done or to be done, or any part connected therewith, shall have a lien upon the property.
Surveyors and Engineers Plotting Mines
The Colorado mechanics’ lien statutes specifically include sur surveyors and civil and mining engineers doing any work of surveying or plotting of any mines, mining claims, lodes, or mineral deposits.
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Material and Equipment Suppliers
Companies that supply material and equipment to be used for construction projects also have a right to mechanics’ liens when they do not get paid, but there is a limitation to this. The materials and equipment must have been supplied at the owner’s or the owner’s agent’s request. Essentially, everyone mentioned above is an agent of the owner. For example, if the general contractor purchases lumber for the project, the GC is acting as the owner’s agent in that respect.
The law puts it this way:
An “agent” of the owner includes the principal contractor and subcontractors. Specifically, “every contractor, architect, engineer, subcontractor, builder, agent, or other person having charge of the construction, alteration, addition to, or repair, either in whole or in part, of said building or other improvement shall be held to be the agent of the owner.
Additionally, the agent concept includes any person who agrees to perform a substantial, specified portion of the work of construction of a given building which is the subject of a general construction contract in accordance with the plans and specifications of such contract. But not included in the definition of “agent” are suppliers. Since a supplier is not considered to be an agent of the owner, a supplier to a supplier will not have lien rights.
Let us take a look at some of the case law in Colorado better understand when material and equipment suppliers have a valid mechanics’ lien. In Schneider v. J.W. Metz Lumber Co., a builder entered into a contract with Colorado Log Homes to purchase prefabricated kits to build log homes. Metz was a wholesale lumber company and provided the raw materials to Colorado Log Homes to use in their kits.
Metz ultimately did not get paid at some point and attempted to assert a mechanics lien against the Schneiders property that was built using a kit from Colorado Log Homes. The Court did not allow the lien stating that they never entered into an agreement with the Schneiders. The contract was between Metz and Colorado Log Homes. Had the Schneiders directly contracted with Colorado Log Homes, there is a possibility the Court would have seen things differently, but we believe this is not likely. Had the Schneider’s purchased the wood directly from Metz, then Metz absolutely would have had a valid lien.
In another case, the Colorado Supreme Court clarified that the materials do not need to be used in the construction project, only that the intention was for them to be used. In the case they decided this issue on, a steel manufacturer supplied steel to be used in the building. The building project was ultimately abandoned during construction and not all of the steel was used. The Court stated that the steel manufacture had a valid mechanics’ lien for the full cost of all steel supplied under the contract.
Another important takeaway from this case was that the reason all of the steel was not used was due to default by a subcontractor. Even though the subcontractor was at-fault for not using all of the steel supplied, the supplier still had a valid mechanics’ lien for the full value of all the steel.
In another case, the supplier fabricated customer fireplace doors and screens but did not deliver them to the construction site due to nonpayment by the property owner. The Court stated that while the supplier had a lien right, they first had to deliver them to the site. This makes sense from a practical perspective because the property owner needs to incur some benefit from the contract even when they do not pay before a lien is attached to the property.
It is important for material and equipment suppliers to know where their products are being used. If they simply have a contractor pickup the materials and do not receive payment, they have no way of knowing what property to attach the mechanics lien to if they don’t get paid.
The Courts have dealt with this problem in the past and provided guidance. In those cases, certain suppliers lost their lien right because they could not provide proof of delivery to the project site. According to the court, “the lack of proof of delivery to a specific job, particularly where the subcontractor had other projects in progress to which materials were delivered, is fatal to the lienors’ claims”
It is important to note that actual delivery is not required in all instances. For example, a lien claimant moved forward with foreclosing on property after not getting paid. The property owner claimed that since the materials were not actually delivered, they did not have a valid lien. The supplier responded with the fact that the general contractor requested the materials to be delivered to their warehouse for storage. According to the Court, this was sufficient to meet the burden of proving delivery. Delivery to the actual property the materials were going to be used is not always necessary.
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If you have any questions about whether you have the right to a mechanics’ lien in Colorado, don’t hesitate to schedule a consultation so we can walk you through all of your options. We believe in supporting the construction industry and there is not better way than to help companies get paid! Call us at 719-300-1300 or click here to schedule a consultation.