Drafting a Mechanic’s Lien Statement
I have previously talked about some of the basics of mechanic’s lien rights under the Colorado mechanic’s lien statute. I want now to talk a little bit about some of the concerns involved in drafting the actual lien itself. This is, of course, all best handled by an attorney who is familiar with the statutory requirements and can keep track of the filing deadlines.
First, you need to determine the total amount the homeowner owes for work you did on the property. Typically, this is going to have to do with the amount the homeowner owes you per your contract. Did you agree to do the work for a flat fee? Are there change orders? If so, were they approved? Does the contract allow you to charge more for hidden defects? Have you provided a final invoice? These are only a few examples of the questions you need to deal with. You must get your arms around all of the charges related to the contract before drafting the lien. Once you record the lien, you might have trouble collecting any different amount later. And there can be consequences for claiming too high a dollar amount owed.
Next, you need to use the proper form of lien under the Colorado law. While you can undoubtedly find a form online, your business or real estate lawyer is going to be the best source for this information. The lien has to be signed and notarized in several places for different purposes at different times, and you have to do all of it right, and in the right order, to protect your right to collect.
Make sure all of the information on the lien statement is true and accurate! In the past, I have seen problems where a lien has an incorrect property description or an incorrect owner. This gives the homeowners arguments they can use to make trouble when you try to foreclose on the lien. It might even invalidate the lien altogether!
Many times, giving notice of your intent to file a mechanic’s lien prompts the homeowner to make payment. In future blog posts, I will discuss what can be done if the homeowner does not pay.
This post gives legal information only. If you need legal advice specific to your situation, please contact us for a consultation.