Chapter 3 - § 3.1 SATISFACTION AND RELEASE OF LIEN

• Jurisdiction: Colorado

§ 3.1 SATISFACTION AND RELEASE OF LIEN

When a lien claimant who has filed a lien is paid, the lien must be released from the public records. As a practical matter, a lien release is generally required in exchange for payment of a claim. If that does not happen, and the lien remains of record after payment, C.R.S. § 38-22-118 describes the rights and procedures through which a person who has an interest in the property may demand a release of the lien.

Upon payment of the amount of the lien claim, together with the costs associated with filing and recording the lien, and the "cost of suit" if a lien foreclosure lawsuit has been commenced, the lien claimant is required to file "an acknowledgement of the same of record."¹ If a lien claimant "neglects or refuses" to record a release within 10 days of such demand, he or she will be liable to the person making the demand for the release for the sum of $10 dollars per day. The same procedure and rights apply if payment of the amount required by the statute is tendered to the lien claimant but the lien claimant refuses to accept it.

One issue to consider is the statute's use of the term "acknowledgement of satisfaction" rather than the term "release." The statute concludes by saying, "Any such statement may be satisfied of record in the same manner as mortgages." Presumably, a typical release of lien form recorded in the public record would meet this requirement. A sample of a release form often used to release liens that have been recorded may be found at Exhibit 3A.

This statute is rarely used, primarily because of the typical lien release procedure mentioned above whereby releases are exchanged for payment. It is also one that if enforced carries a relatively small financial penalty, which also likely contributes to its relatively infrequent use. One Colorado case briefly discusses the application of the statute. In Front Range Home Enhancements, Inc. v. Stowell,² a lien claimant was paid and a...