Lien & Bond Claim Masterclass ? Everything They Don’t Tell You (But Should!) Colorado Webinar | Shannon Bell

Why Contract Language Matters Before Payment Issues Arise

Although the webinar focused on liens and bonds, it began with contract provisions that directly impact a contractor’s ability to get paid.

One key distinction discussed was the difference between pay-when-paid and pay-if-paid clauses. In Colorado, pay-when-paid clauses are typically interpreted as requiring payment within a reasonable time and are not dependent on the general contractor being paid by the owner. Pay-if-paid clauses, however, can shift the risk of owner non-payment to subcontractors, but only if the language is clear, explicit, and acknowledges that risk.

Another critical provision is the prevailing party attorney’s fees clause. In Colorado, legal fees are not recoverable in a standard breach of contract case unless the contract specifically allows them or a statute applies. Without this clause, a contractor may win the case but still lose a significant portion of the recovery to legal costs.

Arbitration Clauses and Their Impact on Lien Enforcement

Arbitration clauses were also highlighted as a common source of confusion. While arbitration can resolve contract disputes, only a court has the authority to foreclose a lien. This means contractors may be forced into parallel proceedings, with a lien foreclosure action filed in court to preserve deadlines while the underlying payment dispute proceeds through arbitration.

Understanding this interaction is essential before agreeing to arbitration provisions in construction contracts.

Colorado Mechanics Lien Deadlines Contractors Must Track

Colorado lien law is strictly statutory, and deadlines are unforgiving.

Contractors must record a mechanics lien within four months of the last date labor or materials were furnished. Punch list work does not extend this deadline. Day laborers face an even shorter window, with only two months to record a lien.

Before recording, contractors must send a Notice of Intent to Lien at least 10 days in advance. Failure to meet this notice requirement can invalidate the lien entirely. Because liens cannot be recorded on weekends or outside clerk office hours, contractors must account for calendar timing when calculating deadlines.

What Must Be Included in a Colorado Lien Statement

A valid lien statement must accurately identify all property owners, include a proper legal description of the property, state the lien amount, and correctly identify the lien claimant’s role on the project. Errors in ownership, property description, or timing can expose the lien to challenge.

Contractors were advised to use legal descriptions rather than relying solely on street addresses, especially on new developments where addresses may not yet be finalized.

Extensions, Exceptions, and Special Rules to Know

Colorado law allows a Notice to Extend Time to File a Lien in limited circumstances. This notice must be recorded within the original lien period and can provide additional time to record the lien itself.

Other important exceptions include homeowner protections. If a homeowner pays the general contractor in full, lien rights for lower-tier parties may be extinguished. Additionally, lien rights may be waived by contract, reinforcing the importance of reviewing lien waiver language carefully.

Bond Claims on Public and Bonded Private Projects

Liens are not permitted on public property, which is where payment bonds apply. In Colorado, bonds are required for state projects over $100,000 and local public projects over $50,000. Payment bonds may also appear on large private projects.

Bond claims require a verified Notice of Claim and must be pursued through legal action within six months of project completion. Unlike liens, bond claims are contractual remedies against the surety rather than property-based rights.

Disburser Notices as an Overlooked Collection Tool

An often overlooked remedy discussed was the disburser notice. When lien rights exist, contractors may notify a lender that funds being held should be paid to them. If ignored, the lender may face liability. While not a replacement for liens or bonds, this tool can add pressure in slow-pay situations.

Understanding Lien Waivers Before Signing

Four types of lien waivers were reviewed: conditional and unconditional waivers for progress payments, and conditional and unconditional waivers for final payments. Contractors were cautioned never to sign an unconditional waiver unless payment has already been received, as these waivers permanently release lien rights.

Final Takeaway

This webinar reinforced that protecting payment rights in Colorado requires more than completing the work. Contractors must understand contract language, track lien and bond deadlines carefully, and act early when payment delays arise. Once a statutory deadline passes, even valid claims may be lost permanently.

Common Questions Contractors Ask

Does the 10-day lien notice period start from mailing or delivery?

The 10-day period begins on the date the Notice of Intent to Lien is mailed, not when it is delivered.

On a bonded private project, can both a lien and a bond claim be filed?

It depends on the contract. Many private bonded projects include language waiving lien rights in exchange for the bond. If no such waiver exists, both remedies may be available.

Is a written contract required to file a mechanics lien in Colorado?

No. A written contract is not required to file a mechanics lien in Colorado. Lien rights are statutory and may exist even in the absence of a written agreement.