Mechanic’s Liens – Owner’s Risk

In Colorado, an owner may have his property subjected to a mechanic’s lien even though he did not contract for construction or construction related work.

This is because a Colorado statute provides that a contractor is the owner’s agent for purposes of the lien law. Also, an owner who knows that construction or construction-related work is being done on his property at another’s request must, within five days after receiving such knowledge, post a notice of non-liability on the property or serve notice on potential lien claimants if he wishes to protect his property from liens. Failure to give or post notice of non-liability may result in mechanic’s liens.

Recently, the Colorado Court of Appeals upheld the validity of a mechanic’s lien in favor of an architectural firm which performed design services for a client who only had a lease and option on the property liened. The court ruled that the lien was valid against the owner’s property for the full value of the architectural services rendered because the owner knew that the services were being performed, yet did not give notice of non-liability as permitted by statute.

Understanding this aspect of the mechanic’s lien law might be critical. In the case mentioned, the architect was able to recover on its mechanic’s lien claim because it made the owner aware that lienable work (design services) was being done on the owner’s property. This facet of the mechanic’s lien law should put construction people and owners on their toes.

Those who may need to rely on their mechanic’s lien rights should cautiously determine the ownership of the property on which they are working. If their client, customer or other contracting party is not the owner of the property, they should make the owner aware of their work.

On the other hand, owners need to be aware of what may be happening with their property.

If their tenants, prospective purchasers or others are engaging architects/ engineers or contracting for construction work, prudent owners should

1 The case involved is Seracuse Lawler & Partners, Inc. v. Copper Mountain, 654 P.2d 1328 (Colo. App. 1982).F-24 first determine the availability of funds for payment of that work or determine whether to post or give the statutory notice which would protect their property from mechanic’s liens.

Familiarity with the mechanic’s lien law provisions involved in the above-mentioned Seracuse Lawler case is recommended to the construction industry and to property owners alike. The present statutory provision applicable is Section 38-22-105, Colorado Revised Statutes.

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