Mechanic's Liens Or Public Works Claims For Construction Equipment Rental Charges

Two decisions of the Colorado Court of Appeals appear to have placed Colorado among a minority of other states where mechanic's lien and public works remedies have been held not available for recovery of unpaid equipment rental charges.

The Colorado court based its ruling on the fact that rental equipment does not enter into and become part of the structure like bricks, roofing materials or floor coverings. Many other states and federal courts, under the Miller Act, have reasoned that rental equipment is used in construction and is therefore not unlike the effort expended by project workers whose labor is uniformly protected by lien and public works laws.

A Colorado case involving mechanic's liens may provide some relief. The language of the decision hints that if the equipment has been rented specifically for use on a particular project and actually used on the project, the rental company may be entitled to a mechanic's lien. Equipment rental firms take note!

The case involving interpretation of the Colorado public works statute appears to overlook the fact that some rentals are specifically allowable under the statute-"team hire." The problem lies in the fact that the court missed that language and the legislature has not updated its wording by recognizing that teams of horses, asses and oxen have now mostly been replaced by backhoes, climbing cranes, lasers and other more sophisticated construction appliances and equipment.

Lawyers and clients interested in pursuing research into this area of the law should refer to the Colorado Court of Appeals cases of Beco Equipment Co., Inc. v. Box, 608 P.2d 85() (Colo. App. 1980) (mechanic's liens); and CPS Distributors, Inc. v. Federal Insurance Co., 685 P.2d 783 (Colo. App. 1984) (public works remedies).

Those who wish to have their rights protected by the Colorado mechanic's lien or public works statute may consider addressing their grievances to the Colorado General Assembly which might be enticed to clarify the statutory language to specifically provide for mechanic's liens and public works remedies for unpaid construction equipment/apparatus rentals.


Update Note: The Colorado General Assembly took heed of the CPS Distributors, Inc. v. Federal Insurance Co. case discussed in the above Brief. It amended the Colorado public contractor's bond statute to provide that rental equipment charges are covered. Sections 38-26-105 and 38-26-106, Colorado Revised Statutes.