What to Do When a Contractor Files a Mechanic’s Lien Against Your Property
If you’re a property owner who just had work done on your property, then you may feel surprised and upset to learn that one of the contractors, subcontractors, laborers, or suppliers (or even more than one!) might have recorded a Mechanic’s Lien against your property. A Mechanic’s Lien can cloud your title, complicate a sale or refinance, and, if left unresolved, potentially lead to foreclosure of the lien. Mechanic’s Liens can be routine in that conflict arising from non-payment can lead to a lien. But most Mechanic’s Liens are resolved without ever going to court. Here's what you need to know.
What Is a Mechanic's Lien?
A Mechanic’s Lien is a legal claim against real property, filed by someone who provided labor, materials, or services to improve that property, but who never received payment. The Mechanic’s Lien gives the unpaid party a security interest in the property itself, meaning they may eventually be able to force a sale (i.e., a foreclosure) to recover what they're owed.
Mechanic’s Liens can be filed by general contractors, subcontractors, material suppliers, and design professionals like architects or engineers. Importantly, a lien can sometimes be filed even if you, the property owner, already paid your general contractor in full, if your general contractor failed to pay a subcontractor or supplier down the line of professionals hired to complete the job.
Why Mechanic’s Liens Get Filed
Most liens trace back to a payment dispute: an invoice that wasn't paid, a change order that was performed but never formally approved, or a disagreement over the quality or completeness of work. Sometimes liens are filed strategically, as leverage in an ongoing dispute, even before all avenues of resolution have been exhausted. The specific reason will depend on your particular circumstances.
How to Tell If a Lien Is Valid
Not every lien that's filed is enforceable. Mechanic’s Liens, because they are regulated by specific statutes, require highly specific information to be valid. It is worth having an attorney review the lien to confirm:
Whether the lien was filed within the statutory deadline. The deadline to file in Colorado is either two months or four months from the claimant’s last day of work on the project or completion of the building.
Whether the Notice of Intent to File Lien was sent on time. In Colorado, the Notice must be provided no later than ten days before the lien itself is recorded.
Whether the amount claimed is accurate and properly itemized. Overinflated or improperly calculated liens can void the lien entirely and could expose the lien claimant to liability.
Whether the person filing the lien actually had a contractual relationship that entitles them to lien rights. Only certain types of claimants may file Mechanic’s Liens against real property.
A lien with a technical defect such as a missed deadline, an inflated amount, or a defective notice may be forfeited, even if the underlying payment dispute has some merit.
Your Options as a Property Owner
Once a valid lien is filed, there are a few options for what you can do:
Negotiate and resolve the underlying dispute. If the claim is legitimate, either paying the claim or negotiating a reduced settlement should result in the lien being released. Often, a critical term of the settlement will be release of the lien.
Dispute the lien's validity. If the lien is defective or the underlying claim is wrong, your attorney can challenge it directly.
Bond off the lien. Colorado allows property owners to post a bond that replaces the property as security, clearing the property’s title so a sale or refinance can proceed while the underlying dispute is resolved separately.
Wait out the claimant's deadline. Lien claimants typically must file a lawsuit to foreclose the lien within a set period after filing. If they miss that deadline, the lien may become unenforceable. This course of action can be risky if you are not sure the lien claimant will actually let the lien expire.
What should you do right now?
Pay attention to this issue. The deadlines come up quickly and they can have serious consequences for your property. Make sure you’re staying on top of your obligations to you can stay in control.
Gather your paperwork. Pull the original contract, payment records, change orders, and any correspondence about the disputed work. If there are any defects, be aware of what those are and whether you’ve followed any defect procedure as appropriate.
Check for a title or closing deadline. If you're mid-sale or mid-refinance, let your attorney know immediately because liens can hold up closing.
4. Talk to a construction attorney before responding to the claimant directly. What you say (or pay) can affect your options.
How Gunning LLC Can Help
At Gunning LLC, we can help property owners evaluate, dispute, and resolve mechanic's liens efficiently, whether that means negotiating a release, challenging a defective filing, or bonding off a lien so your transaction can move forward. If you've received a lien notice, then contact us at (720) 547-8540 for a consultation.
