Chapter 12 - § 12.6 • GENERAL MECHANIC'S LIENS

• Jurisdiction: Colorado

§ 12.6 • GENERAL MECHANIC'S LIENS

§ 12.6.1—Nature and Origin

Mechanic's liens are not derived from English law and were unknown at common law. The prototype mechanic's lien statute was enacted by the General Assembly of Maryland in 1791 in response to a request from the commission that was established to supervise construction of the capitol in Washington. This first statute was limited to the city of Washington and applied only to persons having direct contractual relations with the owners of the land benefited.¹⁶⁷

During the years 1861 to 1900 there were 17 statutory enactments, repeals, re-enactments, transcriptions, and amendments of the Colorado mechanic's lien laws. The Act of 1899¹⁶⁸ constituted a general repeal and re-enactment of the former lien laws and constitutes the source of the present general mechanic's lien law.¹⁶⁹

§ 12.6.2—Purpose

The purpose of the mechanic's lien statute is to benefit and protect persons who supply labor, materials, or services in order to enhance the value or the condition of another's property.¹⁷⁰ Its underlying rationale is to preclude unjust enrichment.¹⁷¹ Labor and materials have gone into the property of another and made it more valuable, so that, when the owner is called upon to protect his property from a lien by paying for the labor or material, he is but paying for something that he has received. Value has been created by labor performed upon and material incorporated into the property or consumed directly in its improvement, and he who has furnished such labor or material has added to the value and is given a lien to the extent of the addition he has made.¹⁷² A blanket lien may not be enforced against fewer than all of the properties in the absence of some showing of proper apportionment.¹⁷³

§ 12.6.3—Construction of Mechanic's Lien Law

The right to a mechanic's lien is wholly a creature of statute.¹⁷⁴ A claimant may choose to file a lien against, and to recover the entire debt from, a single property, even though multiple properties are benefited under the same contract, if the value of the work cannot be apportioned among the properties, so long as the debtor holds the sole interest in all of the properties benefited under the contract.¹⁷⁵ Such single-property lien is not a "blanket" lien.¹⁷⁶ The statute cannot be extended or restricted by the acts of contracting parties.¹⁷⁷ Although all 50 states recognize some form of mechanic's lien, the statutes have significant differences. Thus, in interpreting the Colorado mechanic's lien law, cases from other jurisdictions should be approached with caution.¹⁷⁸ Lien priority relates to the perfection of the lien and not the remedial portions of the statute. Accordingly, the statute's provisions governing priority must be strictly construed.¹⁷⁹

The mechanic's lien statute is to be liberally construed as to its remedial portion, but must be strictly construed in determining the question whether the right to a lien exists.¹⁸⁰ Thus, where the inquiry is whether a person asserting a lien or the work for which he claims it comes within the statutes, or whether the statutory requirements necessary to initiate the lien have been complied with, the statute must be strictly construed.¹⁸¹

The mechanic's lien statute does not itself impose personal liability upon the landowner for obligations incurred by a contractor in the performance of his contract, but only authorizes the creation of a lien for improvements upon the land of the owner.¹⁸²

The mechanic's lien statute does not authorize liens on public property.¹⁸³ The statute providing for contractors' bonds and lien on funds for public construction¹⁸⁴ provides a remedy in lieu of a mechanic's lien.¹⁸⁵

§ 12.6.4—Notice of Lien Law

Upon issuing a building permit for the improvement, restoration, remodeling, or repair of, or the construction of improvements or additions to, residential property, the agency or other authority issuing the permit must send a written notice by first-class mail addressed to the property for which the permit was issued.¹⁸⁶ The notice must be in at least ten-point bold-faced type, if printed, or in capital letters, if typewritten, must identify the contractor by name and address, and must state substantially as follows:

IMPORTANT NOTICE TO OWNERS: UNDER COLORADO LAW, SUPPLIERS, SUBCONTRACTORS, OR OTHER PERSONS FURNISHING LABORERS OR PROVIDING LABOR OR MATERIALS FOR WORK ON YOUR RESIDENTIAL PROPERTY MAY HAVE A RIGHT TO COLLECT THEIR MONEY FROM YOU BY FILING A LIEN AGAINST YOUR PROPERTY. A LIEN CAN BE FILED AGAINST YOUR RESIDENCE WHEN A SUPPLIER, SUBCONTRACTOR, OR OTHER PERSON IS NOT PAID BY YOUR CONTRACTOR FOR SUCH LABORERS, LABOR, OR MATERIALS. HOWEVER, IN ACCORDANCE WITH THE COLORADO GENERAL MECHANICS' LIEN LAW, SECTIONS 38-22-102 (3.5) AND 38-22-113 (4), COLORADO REVISED STATUTES, YOU HAVE AN AFFIRMATIVE DEFENSE IN ANY ACTION TO ENFORCE A LIEN IF YOU OR SOME PERSON ACTING ON YOUR BEHALF HAS PAID YOUR CONTRACTOR AND SATISFIED YOUR LEGAL OBLIGATIONS. YOU MAY ALSO WANT TO DISCUSS WITH YOUR CONTRACTOR, YOUR ATTORNEY, OR YOUR LENDER POSSIBLE PRECAUTIONS, INCLUDING THE USE OF LIEN WAIVERS OR REQUIRING THAT EVERY CHECK ISSUED BY YOU OR ON YOUR BEHALF IS MADE PAYABLE TO THE CONTRACTOR, THE SUBCONTRACTOR, AND THE SUPPLIER FOR AVOIDING DOUBLE PAYMENTS IF YOUR PROPERTY DOES NOT SATISFY THE REQUIREMENTS OF SECTIONS 38-22-102 (3.5) AND 38-22-113 (4), COLORADO REVISED STATUTES.
YOU SHOULD TAKE WHATEVER STEPS NECESSARY TO PROTECT YOUR PROPERTY.¹⁸⁷

§ 12.6.5—Persons Entitled to Lien

The general mechanic's lien statute grants the right of lien in favor of:

• Every person who supplies laborers, machinery, tools, or equipment in the prosecution of the work.¹⁸⁸ A "person" is a natural person, firm, association, corporation, or other legal entity,¹⁸⁹ and includes a foreign corporation not qualified to transact business in Colorado¹⁹⁰ but does not include a labor organization.¹⁹¹ Prior to the 1965 amendment of the mechanic's lien statute,¹⁹² one who rented equipment to a contractor was not included.¹⁹³ Prior to the 2000 amendment of the mechanic's lien statute,¹⁹⁴ persons furnishing labor for the benefit of contractors were not included.¹⁹⁵
• Mechanics, materialmen, contractors, subcontractors, builders, and all persons of every class performing labor upon or furnishing directly to the owner or persons furnishing labor, laborers, or materials to be used in construction, alteration, improvement, addition to, or repair, either in whole or in part, of any building, mill, bridge, ditch, flume, aqueduct, reservoir, tunnel, fence, railroad, wagon road, tramway, or any other structure or improvement upon land, including adjacent curb, gutter, and sidewalk.¹⁹⁶ (Prior to the 1899 re-enactment of the mechanic's lien statute,¹⁹⁷ a subcontractor of the third degree — i.e., a sub- sub- sub-contractor — was not entitled to a lien.¹⁹⁸ The 1899 Act extended the benefits of the statute to "subcontractors . . . of every class.") Prior to the 1965 amendment of the mechanic's lien statute,¹⁹⁹ no lien could be asserted for a sidewalk constructed along the side of the owner's land.²⁰⁰
• Architects, engineers, draftsmen, and artisans who have furnished designs, plans, plats, maps, specifications, drawings, estimates of cost, surveys, or superintendence, or who have rendered other professional or skilled service, or bestowed labor in whole or in part, describing or illustrating, superintending such structure, or work done or to be done, or any part connected therewith.²⁰¹ The phrase "work to be done" in the statute mandates a conclusion that an architect is entitled to a lien even though the improvements are not subsequently erected.²⁰²

While the statute is usually construed liberally, persons claiming its benefits must bring themselves clearly within its provisions as members of the class to whom the remedy is allowed.²⁰³ The statutory remedy cannot be judicially extended so as to be applied to cases not within its provisions.²⁰⁴ A person with an ownership interest in the property is not entitled to a lien.²⁰⁵ But one merely holding an option on property has neither legal nor equitable title, and may claim a lien.²⁰⁶

Noticeably absent from the class of persons enumerated within the mechanic's lien statute are attorneys. Under the language of the statute, services of superintendence are described as those rendered by "architects, engineers, draftsmen, and artisans." To justify a mechanic's lien, the services must have been rendered, bestowed, or done upon the property against which the lien is sought. Legal services do not have that relationship. Rather, they are services rendered not to the property, but to the owner, or as the owner's agent, having only an indirect relationship to the property. Legal services, off-site, concerning the progress of the work do not constitute superintendence.²⁰⁷

The lien of a materialman is independent of the contract between the owner and the principal contractor.²⁰⁸ Defective work by the general contractor or his employees which results in damage or a lack of benefit to the owner does not deprive the materialman of his lien,²⁰⁹ but may deprive the contractor of his lien.²¹⁰

A party claiming a lien may, before or after the filing of the statement of lien, assign in writing his claim and lien to any other claimant or other person who then has all rights and remedies of the assignor for the purpose of filing and for the enforcement of the lien.²¹¹

§ 12.6.6—Contract with Owner

There are two distinct conceptions of the right to a subcontractor's lien recognized by the statutes of the various states: (1) that such liens are allowed by statute through a species of equitable subrogation to the contract between the owner and his contractor, and (2) because of the enhanced value of the property caused by the labor and materials so contributed to it by the consent of the owner through his contractor, made his agent by statute. The latter is the conception...