Mechanic's Lien: Time To Sue

Under the Colorado mechanic's lien law a lien claimant must file suit to foreclose his mechanic's lien within six months after the last work or labor is performed or the building is completed.

It is also generally assumed that the six-month limitation from last work or labor would apply in those circumstances where new construction is not involved. If project work has ceased before actual completion, it is deemed "complete," for time purposes, 3 months after all work has ceased.

Commencement of suit means two things:

(1) a lawsuit must be started by the filing of a complaint or the service of a summons upon the parties being sued (including the property owner); and

(2) the recording of a document giving notice of the commencement of the suit in the offices of the clerk and recorder of the county where the property is located. Both steps are essential. Kalamath Investment Co. v. Asphalt Paving Co., 384 P.2d 938 (Colo.1963).

Occasionally a lien claimant will file a foreclosure action without naming all of the other lien claimants as parties to the suit. This may arise from the fact that when the suit is commenced other lien claimants have not yet filed their mechanic's lien statements. Any lien claimant named in the original suit is protected against the time limitation, but those not named as parties to the suit are not protected.

Lien claimants not named in a timely-commenced lawsuit should either initiate a suit themselves or join in the pending suit through a motion to intervene.

The motion to intervene must be set for hearing before the court which, after hearing, is required to rule on the motion. The right to intervene is granted by statute and a request to the court will usually be granted.

Not long ago, the Colorado Court of Appeals had ruled that the motion to intervene must be granted within the six-month limitation period. Amco Electric Co. v. First National Bank of Denver, 42 Colo. App. 124, 596 P.2d 70 (1979). However, on August 18, 1980, the Colorado Supreme Court reversed that decision and held that only the motion to intervene must be filed within the six-month limitation period. Franklin Contract Sales Co. v. First National Bank of Denver, 200 Colo. 37Q, 615 P.2d 684 (1980).

The Colorado Supreme Court decision favors lien claimants in that they are now not required to file separate foreclosure actions but may join in existing suits commenced by other lien claimants if they file their motions to intervene, along with other necessary pleadings, within six months after their last work and labor or completion of the building. This avoids multiple lawsuits over the same project.

Since mechanic's lien rights afford laborers, subcontractors and material suppliers an important device to assure recovery of amounts due, it is crucial that statutory time limitations be observed and timely actions taken. If a lien claimant does not, his lien rights become valueless.