1975, December, Pg. 2325. Tickled to Death: The 1975 Mechanic's Lien Amendments.

• Author: by John W. Dunn

4 Colo.Law. 2325

Colorado Lawyer

1975.

1975, December, Pg. 2325.

Tickled to Death: The 1975 Mechanic's Lien Amendments

2325Vol. 4, No. 12, Pg. 2325Tickled to Death: The 1975 Mechanic's Lien Amendmentsby John W. DunnOn July 25, 1975, Governor Lamm approved House Bills 1510 and 1578, both amending Article 22, Title 38, C.R.S. 1973, governing the perfection and foreclosure of mechanic's liens in Colorado. These two bills, which became effective October 1, 1975, made substantial changes in the mechanic's lien law. Perhaps the most important change is that they extend by one month the limitations on the filing of liens, although they require at least 10 days' notice to the landowner before recording of the liens, and they introduce as an alternative to lien foreclosure the concept of the performance and labor and materials bonds now required in jobs under government contract. In addition, these two bills make lienable the payments required to fund any trust pursuant to labor contract, raise the interest rate collectible by lien claimants to 12 percent, and require contractors to maintain separate accounting for separate jobs. This article examines those changes on a section-by-section basis following the order of the existing statute and compares the changes with existing law.

Limitations Extended

Section 1 of H.B. 1578 adds new subsections (4) and (5) to C.R.S. 1973, § 38-22-101, the portion of the mechanic's lien statute describing in whose favor mechanic's liens may be filed. New subsection (4) provides that the labor performed which gives rise to the right to file a lien shall include any payments required under any labor contract to any trust established for the provision of pension, profit-sharing, vacation, health and welfare, prepaid legal services, or apprentice training benefits for the use of the employees of any contractors. The subsection further provides that the trustee of the trust has a lien therefor.

New subsection (5) will increase the interest rate under the act to 12 percent per annum, or whatever interest rate was agreed upon under the terms of any contract or agreement under which the labor or material was supplied. Previously, the lien claimant was entitled only to the 6 percent rate or to a greater rate if it had been agreed upon. As a practical matter, subcontractors, laborers and materialmen, having no contract with the landowner, have rarely received more than the 6 percent rate.

Prior to the approval of H.B. 1510 and 1578, C.R.S. 1973, § 38-22-109(3) required that the owner or reputed owner of the property or his agent be served with a copy of the lien at or before the time of its filing in the case of the assertion of a lien by a subcontractor. By reason of the provisions of C.R.S. 1973, § 38-22-101(3), granting to a subcontractor the status of a principal contractor where the contract between the landowner and his general contractor exceeded $500 and was not recorded, it was often not the practice under the existing statute to give the landowner any notice of the encumbering of his property by the recording of a lien statement. Section 1 of H.B. 1510, containing the same language as § 2 of H.B. 1578, therefore

2326constitutes a substantial departure from existing law by requiring that, in order to preserve any lien for work performed or a lien statement must be served upon the owner or reputed owner of the property or his agent and the principal or prime contractor or his agent at least 10 days...