Mechanic’s lien is a double-edged sword to both contractors and property owners in Colorado. Know more about this on this site here. The law protects the contractors and the subcontractors against non-payment when they are finished with the project. Simultaneously, no one can file a claim, especially if doing so would result in an unfair settlement, or the claimant did not provide all the requirements and follow directions.
For many construction professionals working on a private project in Colorado, this law is undoubtedly advantageous. The landowners are also entitled to the protection, but they are not quite as powerful as to the one given to the suppliers and contractors.
Introduction to Mechanic’s Lien in Colorado
Before anything else, a background about alien is essential for the claimant. The document gives the other person the right to claim your property if you are a landowner. This can be provided into the holder through an agreement voluntarily agreed by both sides through the law’s power.
One of the most common examples of liens is a deed of trust or mortgages. In these situations, if the owner cannot pay the mortgage monthly, the lender has the right to seize and sell the property to recover the amount that they owed to the buyer. All the agreements are recorded in a recorder’s office in Colorado if the house or land is located there.
Priority: What Is it and How Does it Work?
In a Colorado real estate law, you need to record a lien document with your local county’s recorder office clerk. This recording will put a notice to everyone involved that a contractor may obtain the rights to a property if there’s still money owed to him.
Several other workers will often claim a lien because all of them were not paid for the job. The determining factor is the date and time of the recording. The second claimant will be put behind the first in the priority list based on the time and date that they have recorded their claims. Note that this can only be applied to real estate and not specifically to a mechanic’s lien.
Protection of the Mechanic’s Lien
The Colorado statute grants that filing the document is allowed to a contractor who has done work, supplied materials, machinery, and services that enhance a property’s value. The contractors are often favored over the owners. The courts consistently design the laws in ways where the contractor will be protected and benefitted. The purpose of the whole thing is to prevent a landowner from becoming “unjustly enriched” at anyone else’s expense, especially when he withholds the payments after the project is finished.
Are there Contractors Who are Not Covered?
The claimants will only have the right when they do particular jobs that are dictated in Colorado’s statutes. The types of services done to a property that is not qualified for the lien include lawn mowing service, periodic maintenance, janitorial services, house cleaning, etc.
There are times when a landscape company will put an irrigation system into a villa. In this case, then they can start with the liminary notices in Colorado to file a lien when the business does not receive any compensation for the work done. But when the same company does maintenance work for landscaping, then they may not be qualified to file.
How Does the Process Start?
In Colorado statutes, a mechanic’s lien typically enjoys a privileged status. As what was described as a priority above, most contractors need to be the first to file and record documents to be considered as a priority.
However, this can be different under the laws in Colorado. The need for lien happens when the work has started. The commencement of the start of a work does not occur when a contractor begins to dig a portion of the land. This can happen early when the owner has drafted a contract with engineers, architects, surveyors, and more to design the property.
When the contract has been executed with any of the above professionals, then this is typically when the work is said to commence. This applies to newly-built properties, remodeled, flipped, and more. The professionals’ work can fall into the statutory definition in Colorado, and each one of them is entitled to a lien depending on the work they have done.
Particular Priorities that are Worth Noting
Special priorities do exist. The contractors won’t have an obligation to record their statements with the recorder and county clerk until they decide that it’s time to do so. Since the first day, they have the rights that they have started working without the need to record it. These rights are superior to any other interests that can arise in a specific property.
What this means is that for homeowners, even if the mortgage company has already filed a lien to the property, this filing will be junior to that of a mechanic’s filing. Read more about mortgage lien in this link here: https://budgeting.thenest.com/mortgage-lien-21350.html. Even if there will be a foreclosure, a worker’s rights will still be senior against that of the lender, and this will remain in priority until everything is settled.
The law is in favor of the contractors to receive the payments that are due to them first. This upends the concept earlier than you need to be the first to file a lien to have priority over the others. This is often called a “secret lien” since Colorado does not require a form of notice when other states do.