1977, February, Pg. 262. Substitution of Bond for Mechanics' Liens.

• Author: by John P. Leopold

6 Colo.Law. 262

Colorado Lawyer

1977.

1977, February, Pg. 262.

Substitution of Bond for Mechanics' Liens

262Vol. 6, No. 2, Pg. 262Substitution of Bond for Mechanics' Liensby John P. LeopoldJohn P. Leopold, Littleton, is a partner in the firm of Dubee & Leopold.263The 1975 "Long Session" of the Colorado General Assembly produced a number of significant changes in the State's Mechanics' Lien law. One of those provisions permits the owner of property subject to a Mechanics' Lien to post a bond with the Clerk of the appropriate District Court and thereby obtain an immediate release of the Mechanics' Lien.(fn1) After the Court has approved the bond and has authorized the release of the Mechanics' Lien, the lien claimant still may follow normal foreclosure proceedings against the bond. However, the lien itself will no longer serve to cloud the title to the property in question.

A review of the new statutory provisions reveals that the bond may be filed "at any time."(fn2) The property owner thus may be advised that a Mechanics' Lien can be cleared in a routine fashion, subject to the Court's docket. However, the bond provisions do not affect the course of foreclosure proceedings,(fn3) and the property owner should be warned that his bond will be employed throughout the litigation.

The statute does not dictate the form of the bond. Corporate surety bonds are specifically allowed, and the Court is authorized to use its sound discretion to approve" other undertakings."(fn4) This author was granted permission to post a cash bond in a case in Jefferson County. Real property bonds also should be acceptable.

In any event, the bond's value must be equal to one and one-half times the amount of the lien, plus costs allowed to date.(fn5) The cost of recording the lien and possibly a reasonable service of process fee should be included in the computation of the bond. The property owner also must pay a forty-one dollar ($41.00) filing fee when the bond is posted. The filing fee is necessary because the posting of bond represents the first attempt by either party to invoke the Court's jurisdiction.

This article is followed by suggested forms which might be employed when a bond is substituted for a Mechanics' Lien. The Certificate of Release form has been approved by the Colorado Bar Association's Real Property and Forms...