Mechanic's liens—FAQ

We've been hearing some strange interpretations of the law regarding mechanic's liens, so we thought we would post answers to a few common questions.

Q: Is there a dollar limit on how much I can put on my mechanic's lien?

A: Your mechanic's lien should reflect the amount of money that you are owed and have not been paid. You cannot record a mechanic's lien for an amount that you know to be incorrect. There is no statutory limit to the amount of money you can record a mechanic's lien for.

Q: Do I have to have a written contract to file a mechanic's lien?

A: No, you do not have to have a written contract to file a mechanic's lien. Written contracts are often helpful in proving your claim, but they are not required.

To successfully collect on a mechanic's lien, be prepared to prove that you caused the improvements to be installed on the real property, and be prepared to prove the reasonable and agreed upon value of those improvements. In other words: prove that you did the work, and prove how much the homeowner or contractor agreed to pay you for that work.

Q: Will I be exposed to damages for filing a fraudulent lien if I file a lien for the amount I believe I am owed, but I ultimately do not recover the full amount?

A: Probably not. Colorado Revised Statute § 38-22-128 governs penalties for those who file excessive liens. It imposes penalties on "[a]ny person who files a lien . . . for an amount greater than is due without a reasonable possibility that said amount claimed is due and with the knowledge that said amount claimed is greater than that amount due, and that fact is shown in any proceeding under this article." The penalty for filing an excessive lien is forfeiting your right to the lien plus assuming liability for the other person's legal expenses.

In practical terms, this means that as long as you have reasonable grounds to believe that the money is owed to you, you should not risk liability for filing an excessive or fraudulent lien.

TIP: Practically speaking, where the issue of excessive liens is more likely to arise is if you accidentally record a lien against the wrong property or the wrong legal description. It is always important to keep good records to tie the work and your invoices to the address and legal description of the property you are working on. This will minimize the chances of problems if you end up needing to record a lien.

In larger developments or multi-unit buildings, this can sometimes be complicated because the project starts under one unified legal description and mailing address that are used by the contractor during construction but as the properties are completed, the single property will be broken out into multiple separate properties that have different addresses and different legal descriptions.

Q: How long do I have to record my mechanic's lien?

A: In most instances, you must record your lien four (4) months after the last date of substantial work you performed on the project but under certain circumstances you may have less than four months. Your deadlines for recording are described in C.R.S. § 38-22-109.

You will need to file an action (e.g. lawsuit) to foreclose against your lien within six months after the last date that anyone (not just the lien claimant) performed any substantial work on the property—whether that person recorded a lien or not. C.R.S. § 38-22-110.

TIP: Punch list items, paperwork, walkthroughs, etc. are NOT substantial work for the purposes of recording a mechanic's lien.

TIP: Maintain good records to prove the date of your last day of substantial work on the project. Especially if you wait to record your mechanic's lien until close to the deadline, these records will extremely helpful to proving your lien in court.

If you want to suggest questions for further Q&A, consider posting it in the comments or submitting your suggestion through our webform.