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After filing a mechanic’s lien in Colorado what is the next step to enforce it?

Filing a mechanic's lien is only the first step to receiving payment for a construction debt. If the property owner doesn't pay after receiving notice of a lien, further action will be needed to preserve the right to receive payment. While a lien prevents a property from being sold or refinanced while the lien is in place, a lien will expire if it isn't enforced.

How is a mechanic's lien enforced in Colorado?

Often, the filing of a lien will be enough to prompt the property owner to make immediate payment to satisfy the debt or to pressure the contractor responsible for the payment into paying if it is the contractor that owes funds to a sub contractor or laborer. If payment is not made, the lien holder will need to file a foreclosure action on the property.

What is a foreclosure action?

A foreclosure action is a court proceeding to force the sale of property upon which a lien has been placed. The proceeds of the sale will first go to repaying the lien holder. Any remaining funds after the debt is paid in full will go to the property owner. The property owner can prevent the sale by either making full payment or by reaching a settlement agreement for a lesser amount or payment plan. If the property owner disputes that money was owed or the amount of money, the sale will be paused while both the lien holder and property owner are given the opportunity to present evidence to the court regarding what, if anything, is owed.

What is the deadline to file a foreclosure action?

A foreclosure action must be filed within the later of (1) six months of the lien holder's final delivery of materials or services or (2) six months of the completion of the construction project. If the second option is chosen, the lien must be renewed every 12 months within 30 days of the anniversary of the filing of the lien. No renewal is needed once a foreclosure action has commenced.

What happens if the debt is repaid while this process is pending?

The lien holder is required to file an acknowledgment of satisfaction if the debt is in fact satisfied after the lien has been filed but before the foreclosure action is completed. If an acknowledgement is not filed within 10 days of satisfaction, there is a fine of $10 per day until the lien is removed.

Are there any alternatives to a foreclosure action?

The rights to a claim for a construction debt can be sold or assigned to any party. Debt collection agencies or other debt buyers frequently buy debts including construction-related debts. However, they will offer only a fraction of what the debt is worth because they assume the risk that the debt will never be repaid. The advantage to the original claimant is that they receive an immediate payment in a guaranteed amount.

To get help filing a foreclosure action for a mechanic's lien in Colorado or proving the amount of a debt owed, contact Miller & Law, P.C. today.

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Miller & Law P.C. Attorneys at Law
1900 West Littleton Blvd. Littleton, Colorado 80120
Phone: 303-722-6500 Fax: 303-722-9270
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