Colorado Mechanic’s Lien–What Kind of Preliminary Notice is Required?
Some states require a preliminary notice before recording a mechanic’s lien. But what about Colorado? This state does require such a pre-lien notice but unlike other states that mandate its service near the beginning of the project, this type of notice is only required near the end and right before recording the Colorado mechanic’s lien.
When serving a preliminary notice near the beginning of the job, the purpose is to identify the contractor to the owner who can then include them in lien waivers and progress draws. However, in Colorado there is no such preliminary notice requirement near the beginning of the job. Colorado Statutes Section 38 – 22 – 102(4) simply states a sub or supplier may serve a preliminary notice. As a result, few contractors serve this notice and in many cases attorneys actually recommend not serving it–can cause problems with construction lenders and politically speaking, you can alienate yourself against the general contractor. But with there ever be an instance in which it is recommended to use the notice as a prerequisite to a Colorado mechanic’s lien?
In some cases, yes. When you send the notice to the prime contractor and owner via certified mail, the owner is then required to withhold from the general contractor money sufficient to pay your claim. This becomes very beneficial near the end of the project when you are having payment problems and want to make sure your last progress draws and retention is paid. But of course, by doing so, you are doing battle with the general contractor–so do not use the form unless you frankly have no desire to do other business with the prime contractor in the future.
But remember, the notice has little effect if served late –at a time when the owner has already paid the general in full and there is nothing left to be disbursed. Remember, this is not the same as the “Notice to Disburser” notice. This has the effect of requiring the owner to look out for you, either by way of joint checks, a building control arrangement, lien waivers, or other protective measures.
If you have any questions about this notice or any other Colorado mechanic’s lien issues, feel free to call National lien Law for a free initial consultation.