Chapter 19 - § 19.3 • THE LIEN STATEMENT

• Jurisdiction: Colorado

§ 19.3 • THE LIEN STATEMENT

CBA-CLE Fillable Forms No. 180A, Statement of Mechanics' Lien with Notice of Intent to File a Lien Statement and Affidavits of Service, is widely used by attorneys practicing in the mechanics' lien field. (See Exhibit 19A to this chapter.) While the use of that form is not mandatory, using the form is helpful when preparing the lien statement and the notice of intent. Below, this chapter addresses the categories for the lien statement and the notice of intent.

§ 19.3.1-The Lien Claimant - Who Has Lien Rights

Strict Versus Liberal Construction

Because lien statutes are in derogation of the common law, they are strictly construed when determining who is entitled to a lien. As explained over a century ago:

A mechanic's lien statute . . . must be strictly construed in determining the question as to whether the right to a lien exists. 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. . . . Only those persons to whom the statute plainly or expressly gives the right to a lien, can acquire it.¹⁸

This strict construction has resulted in the denial of lien rights to those whose work does not fall squarely within the statute. In Kern v. Guiry Brothers Wall Paper Co., for example, the Colorado Supreme Court held that those merely furnishing labor for the benefit of the contractor are not within the provisions of the mechanics' lien statute.¹⁹ The court reasoned that "the statute nowhere provides, either in express terms or by necessary implication, that one simply furnishing labor for a contractor is entitled to a lien for the value of such labor."²⁰ The court further noted that "[t]he Mechanics' Lien Act . . . cannot by construction be extended to cases not within its provisions."²¹

Similarly, in Ridge Erection Co. v. Mountain States Telephone & Telegraph Co.,²² the Colorado Court of Appeals explained that the statute "contains an express and exhaustive enumeration of those classes of persons entitled to claim a mechanic's lien and those classes of acts for which such a lien may be claimed."²³

In contrast to the strict construction applied when determining whether lien rights exist, once a lien claimant is deemed entitled to a lien, the mechanics' lien statute is liberally construed as to its remedial provisions.²⁴ Once the right to a lien is established, the policy shifts to "construing mechanics' liens laws in favor of claimants."²⁵

Although this strict construction has resulted in the denial of lien rights to those who do not fall squarely within the statute, Colorado's lien statute is fairly broad and has been amended by legislation to expand the class of parties entitled to lien rights. In short, anyone who has supplied equipment, material, labor, machinery, or tools to be used in the construction, alteration, or repair of any structure, or who makes an improvement upon the land itself, is eligible to claim a mechanics' lien.²⁶

Contractors

General contractors and subcontractors are clearly in within the scope of those entitled to liens. Specifically:

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 [improvement] . . . shall have a lien upon the property . . . .²⁷

Laborers

In addition to laborers themselves, those supplying laborers for construction projects are also entitled to liens. In 2000, in response to the Colorado Court of Appeals holding in Skillstaff of Colorado, Inc. v. Centex Real Estate Corp.,²⁸ the Colorado General Assembly passed SB 00-066, which extended lien rights to personnel agencies and labor pools that furnish laborers for construction projects.

Superintendents

While superintendents are included within the scope of the lien statute, not all work performed by such superintendents is lienable. In Pitschke v. Pope,²⁹ the court of appeals held that "superintendence" work that is lienable involves "seeing that the labor was properly applied to the material."³⁰ In contrast, time spent putting pressure on suppliers to ensure delivery is not considered "superintendence" and thus is not lienable.³¹

Designers, Engineers, and Architects

Architects, engineers, and others providing design services also have lien rights in Colorado. Specifically, the lien statute covers:

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, or superintending such structure, or work done or to be done, or any part connected therewith, shall have a lien upon the property . . . .³²

In fact, because the statute specifies that an architect's lien applies to both "work done or to be done," the design and engineering professionals can have lien rights even when their designs and plans are not used and the improvements are never built.³³

The fact that design professionals have lien rights is important to all classes of lien claimants, since the priority date for all lien claimants relates back to the time of the commencement of work under the contract between the owner and the first contractor.³⁴ The design professionals are typically the first ones to perform work, and preliminary design services constitute "commencement of the work" for purposes of priority.³⁵

Surveyors and Engineers Plotting Mines

The lien statute specifically notes that it applies to surveyors and civil and mining engineers doing any work of surveying or plotting of any mines, mining claims, lodes, or mineral deposits.³⁶

Material and Equipment Suppliers

Material and equipment suppliers can have lien rights, but there are limitations. Additionally, in response to the Tenth Circuit Court of Appeals holding in Bushman Construction Co. v. Air Force Academy Housing, Inc. that persons who supplied rented machinery, tools, and equipment were not entitled to a mechanics' lien,³⁷ the mechanics' lien statute was amended to expressly allow for liens for rented equipment.

One key limitation to the lien rights of equipment and material suppliers is that the equipment and materials must have been supplied to the owner or the owner's "agent." "Privity" with the owner is not necessary in order to be entitled to lien rights. But anyone claiming a lien must have provided services or materials "at the instance of the owner, or of any other person acting by the owner's authority or under the owner, as agent, contractor, or otherwise . . . ."³⁸

An "agent" of the owner includes the principal contractor and subcontractors. Specifically, "every contractor, architect, engineer, subcontractor, builder, agent, or other person having charge of the construction, alteration, addition to, or repair, either in whole or in part, of said building or other improvement shall be held to be the agent of the owner . . . ."³⁹

This "statutory agent" concept encompasses "any person who agrees to perform a substantial, specified portion of the work of construction of a given building which is the subject of a general construction contract in accordance with the plans and specifications of such contract . . . ."⁴⁰ But not included in the definition of "agent" are suppliers. Because a supplier is not considered to be an agent of the owner, a supplier to a supplier will not have lien rights.

In Schneider v. J.W. Metz Lumber Co.,⁴¹ for example, the petitioners entered into "agreements with Colorado Log Homes (CLH) to purchase prefabricated kits to construct log homes."⁴² Metz, a wholesale lumber company, "provided materials for the prefabricated kits to CLH."⁴³ Metz claimed that it had mechanics' lien rights against the petitioners' property by virtue of supplying the materials pursuant to its contract with CLH. The supreme court disagreed:

Metz Lumber, which wholesaled the materials to CLH and delivered them at CLH's arrangement, had no contractual relationship with petitioners.

Metz, lacking any agreement with petitioners apart from the agreement to deliver the materials for a fee, can only claim a lien against petitioners if CLH can be classified as a "contractor, architect, engineer, subcontractor, builder, agent or other person having charge of the construction . . . ."⁴⁴

The court held that "Metz supplied the lumber under a contract with CLH and not at the instance of the 'owner' or 'person having charge of the construction'" and therefore "cannot assert a mechanic's lien against petitioners' property."⁴⁵

Another limitation upon the lien rights of material suppliers is that the materials must be supplied "for use" on the project. It is not always necessary that the materials actually be used, however.⁴⁶ In Atkinson v. Colorado Title & Trust Co., for example, the Colorado Supreme Court held that the steel supplier was entitled to a lien for the value for all of the steel furnished under its contract, even though the building was not finished and, thus, not all of the steel supplied was actually placed in the building.⁴⁷

In Kobayashi v. Meehleis Steel Co.,⁴⁸ the lien claimant supplied and fabricated certain steel elements to a precast concrete subcontractor to be used for fabricating 96 precast concrete columns. While the lien claimant's materials and work met the contract requirements, the work of the precast concrete subcontractor did not, and only 45 of the 96 columns were incorporated into the building. The court of appeals held that the lien claimant was still entitled to a lien for the full value of the materials supplied, even though not all of the materials were incorporated...