Legal Commentary: Swords or Shields? The Two Types of Mechanics Liens
In Colorado, there are two different types of mechanic’s liens. One type provides for remedies to those who supply labor, materials, services and other lienable benefits for the improvement of property under contract with a property owner or the owner’s agent. We will call that a “Section 101” lien, 101 being the section of the Colorado mechanic’s lien statute that creates that lien remedy.
The other lien type arises when owners of property fail to post or serve notice upon others that their properties will not be liable for mechanic’s liens. Those notices must be given no later than five days after owners become aware that lienable work is being performed on their properties. That lien may be called a “Section 105” lien, again referring to the applicable section of the Colorado mechanic’s lien statute.
The main differences between the two lien types is that one results from owners contracting to have work done to their property (Section 101 liens) and the other from someone other than the owners contracting to have work done to the owner’s property (Section 105 liens).
Section 101 liens are probably the most common because they arise from owners contracting to have construction or construction-related work performed. Design professionals, contractors, and their contractors’ suppliers, subcontractors, rental companies, laborers and others have lien rights because they have added value to the owners’ properties at the owners’ requests.
On the other hand, Section 105 mechanic’s liens do not result from owners having contracted to have work done on their properties. Instead, those liens may be the result of owners knowing that work is being done on their properties but failing to take timely action to alert potential lien claimants that their properties may not be subjected to mechanic’s liens.
That situation typically arises with rental properties involving tenants who contract to have tenant finish or other work performed on their leased properties. For owners to protect against their properties from being subjected to mechanic’s liens, they must either post or serve notices of the non-liability of their properties to mechanic’s liens. Those notices must be posted on the property or served within five days after the owners become aware that construction work is being performed.