How do I obtain a construction lien?
Full Question:
My husband is a contractor who owns his own business. A builder hasn't paid our company in 3 months. He has completed the work for this builder and still hasn't been paid in 3 months. How do we go about putting liens on the work completed?
01/16/2009 |
Category: Contractors » Construction... |
State: Colorado |
#15009
Answer:
A lien is the right to retain the lawful possession of the property of another until the owner fulfills a legal duty to the person holding the property, such as the payment of lawful charges for work done on the property. The right of lien generally arises by operation of law, but in some cases it is created by express contract. Liens that arise in construction situations include construction liens, contractor liens, mechanic liens, attorney liens, architect liens and other liens applicable in your state. By virtue of express statutes in most states, mechanics and material men or persons who furnish materials for the erection of houses or other buildings, are entitled to a lien or preference in the payment of debts out of the houses and buildings so erected and to the land, to a greater or lessor extent, on which they are erected. In some states, a claim must be filed in the office of the clerk of the court or a suit brought within a limited time. On the sale of the building these liens are to be paid pro rata. In some states no lien is created unless the work done or the goods furnished amount to a certain specified sum, while in others there is no limit to the amount. In some states, contractors and subcontractors must notify the property owner prior to filing a lien, but in other states such liens can be filed without any notification to the owner. Lien claimants who are contractors or subcontractors are protected under this legal doctrine because all their materials and labor are "buried" in the real estate, having become part of it. Unlike mortgage liens, however, the liens of these claimants cannot force a foreclosure.
The priority of liens on a construction project does not depend upon the time of completion of the particular job, but rather everything relates back to the first visible commencement of the work. This stipulation means the final work is equal in priority to the initial work of laying a cement foundation. Therefore, during the entire work of construction, the owner must obtain lien releases or waivers of lien from each subcontractor and material supplier. Without these waivers or releases the real estate is subject to liens of all the subcontractors, even if the general contractor, though paid in full, fails to pay the subcontractors.
The following are Colorado statutes:
38-22-101. Liens in favor of whom — when filed — definition of person.
(1) Every person who furnishes or supplies laborers, machinery, tools, or
equipment in the prosecution of the work, and mechanics, materialmen,
contractors, subcontractors, builders, and all persons of every class
performing labor upon or furnishing directly to the owner or persons
furnishing labor, laborers, or materials to be used in construction,
alteration, improvement, addition to, or repair, either in whole or in
part, of any building, mill, bridge, ditch, flume, aqueduct, reservoir,
tunnel, fence, railroad, wagon road, tramway, or any other structure or
improvement upon land, including adjacent curb, gutter, and sidewalk, and
also architects, engineers, draftsmen, and artisans who have furnished
designs, plans, plats, maps, specifications, drawings, estimates of cost,
surveys, or superintendence, or who have rendered other professional or
skilled service, or bestowed labor in whole or in part, describing or
illustrating, or superintending such structure, or work done or to be done,
or any part connected therewith, shall have a lien upon the property upon
which they have furnished laborers or supplied machinery, tools, or
equipment or rendered service or bestowed labor or for which they have
furnished materials or mining or milling machinery or other fixtures, for
the value of such laborers, machinery, tools, or equipment supplied, or
services rendered or labor done or laborers or materials furnished, whether
at the instance of the owner, or of any other person acting by the owner's
authority or under the owner, as agent, contractor, or otherwise for the
laborers, machinery, tools, or equipment supplied, or work or labor done or
services rendered or laborers or materials furnished by each, respectively,
whether supplied or done or furnished or rendered at the instance of the
owner of the building or other improvement, or the owner's agent; and every
contractor, architect, engineer, subcontractor, builder, agent, or other
person having charge of the construction, alteration, addition to, or
repair, either in whole or in part, of said building or other improvement
shall be held to be the agent of the owner for the purposes of this
article.
(2) In case of a contract for the work, between the reputed owner and a
contractor, the lien shall extend to the entire contract price, and such
contract shall operate as a lien in favor of all persons performing labor
or services or furnishing laborers or materials under contract, express or
implied, with said contractor, to the extent of the whole contract price;
and after all such liens are satisfied, then as a lien for any balance of
such contract price in favor of the contractor.
(3) All such contracts shall be in writing when the amount to be paid
thereunder exceeds five hundred dollars, and shall be subscribed by the
parties thereto. The contract, or a memorandum thereof, setting forth the
names of all the parties to the contract, a description of the property to
be affected thereby, together with a statement of the general character of
the work to be done, the estimated total amount to be paid thereunder,
together with the times or stages of the work for making payments, shall be
filed by the owner or reputed owner, in the office of the county clerk and
recorder of the county where the property, or the principal portion
thereof, is situated before the work is commenced under and in accordance
with the terms of the contract. In case such contract, or a memorandum
thereof, is not so filed, the labor done and materials furnished by all
persons shall be deemed to have been done and furnished at the personal
instance of the owner, and such persons shall have a lien for the value
thereof.
(4) For the purposes of this article, the value of labor done shall
include, but not be limited to, the payments required under any labor
contract to any trust established for the provision of any pension,
profit-sharing, vacation, health and welfare, prepaid legal services, or
apprentice training benefits for the use of the employees of any
contractors, and the trustee of any such trust shall have a lien
therefor.
(5) All claimants who establish the right to a lien or claim under any of
the provisions of this article shall be entitled to receive interest on any
such lien or claim at the rate provided for under the terms of any contract
or agreement under which the laborers were furnished or the labor or
material was supplied or, in the absence of an agreed rate, at the rate of
twelve percent per annum.
(6) For purposes of this article, "person" means a natural person, firm,
association, corporation, or other legal entity; except that it shall not
include a labor organization as defined in section 24-34-401 (6), C.R.S.
38-22-102. Payments — effect.
(1) No part of the contract price, by the terms of any such contract,
shall be made payable, nor shall the same, or any part thereof, be paid in
advance of the commencement of the work, but the contract price, by the
terms of the contract, shall be made payable in installments, or upon
estimates, at specified times after the commencement of the work, or on the
completion of the whole work; but at least the following percentages of the
total contract price shall be made payable at least thirty-five days after
the final completion of the contract:
(a) Fifteen percent of the first two hundred fifty thousand dollars of the
contract price;
(b) Ten percent of the contract price in excess of two hundred fifty
thousand dollars up to and including five hundred thousand dollars;
(c) Five percent of the contract price in excess of five hundred thousand
dollars up to and including seven hundred fifty thousand dollars;
(d) Two percent of the contract price in excess of seven hundred fifty
thousand dollars.
(2) No payment made prior to the time when the same is due, under the
terms and conditions of the contract, shall be valid for the purpose of
defeating, diminishing, or discharging any lien in favor of any person,
except the contractor or other person to or for whom the payment is made,
but as to such liens, such payment shall be deemed as if not made and shall
be applicable to such liens, notwithstanding that the contractor or other
person to or for whom it was paid may thereafter abandon his contract, or
be or become indebted to the reputed owner in any amount for damages or
otherwise or for nonperformance of his contract or otherwise.
(3) As to all liens, except those of principal contractors, the whole
contract price shall be payable in money, and shall not be diminished by
any prior or subsequent indebtedness, offset, or counterclaim in favor of
the reputed owner and against the principal contractor, and no alteration
of such contract shall affect any lien acquired under the provisions of
this article. In case such contracts and alterations thereof do not conform
substantially to the provisions of this section, the labor done and
laborers or materials furnished by all persons other than the principal
contractor shall be deemed to have been done and furnished at the personal
instance and request of the person who contracted with the principal
contractor, they shall have a lien for the value thereof.
(3.5) Any provisions of this section to the contrary notwithstanding, it
shall be an affirmative defense in any action to enforce a lien pursuant to
this article that the owner or some person acting on the owner's behalf has
paid an amount sufficient to satisfy the contractual and legal obligations
of the owner, including the initial purchase price or contract amount plus
any additions or change orders, to the principal contractor or any
subcontractor for the purpose of payment to the subcontractors or suppliers
of laborers, materials, or services to the job, when:
(a) The property is an existing single-family dwelling unit;
(b) The property is a residence constructed by the owner or under a
contract entered into by the owner prior to its occupancy as the owner's
primary residence; or
(c) The property is a single-family, owner-occupied dwelling unit,
including a residence constructed and sold for occupancy as a primary
residence. This paragraph (c) shall not apply to a developer or builder of
multiple residences except for the residence that is occupied as the
primary residence of the developer or builder.
(4) Any of the persons mentioned in section 38-22-101, except a principal
contractor, at any time may give to the owner, or reputed owner, or to the
superintendent of construction, agent, architect, or to the financing
institution or other person disbursing construction funds, a written notice
that they have performed labor or furnished laborers or materials to or for
a principal contractor, or any person acting by authority of the owner or
reputed owner, or that they have agreed to and will do so, stating in
general terms the kind of labor, laborers, or materials and the name of the
person to or for whom the same was or is to be done, or performed, or both,
and the estimated or agreed amount in value, as near as may be, of that
already done or furnished, or both, and also of the whole agreed to be done
or furnished, or both.
(5) Such notice may be given by delivering the same to the owner or
reputed owner personally, or by leaving it at his residence or place of
business with some person in charge; or by delivering it either to his
superintendent of construction, agent, architect, or to the financing
institution or other person disbursing construction funds, or by leaving it
either at their residence or place of business with some person in charge.
No such notice shall be invalid or insufficient by reason of any defect of
form, provided it is sufficient to inform the owner or reputed owner of the
substantial matters provided for in this section, or to put him upon
inquiry as to such matters.
(6) Upon such notice being given, it is the duty of the person who
contracted with the principal contractor to withhold from such principal
contractor, or from any other person acting under such owner or reputed
owner, and to whom, by said notice, the said labor, laborers, or materials,
have been furnished or agreed to be furnished, sufficient money due or that
may become due to said principal contractor, or other persons, to satisfy
such claim and any lien that may be filed therefor for record under this
article, including reasonable costs provided for in this article.
(7) The payment of any such lien, which has been acknowledged by such
principal contractor, or other person acting under such owner or reputed
owner in writing to be correct, or which has been established by judicial
determination, shall be taken and allowed as an offset against any moneys
which may be due from the owner, or reputed owner to such principal
contractor, or the person for whom such work and labor was performed or
furnished.
38-22-103. Attaching of lien — enforcement.
(1) The liens granted by this article shall extend to and cover so much of
the lands whereon such building, structure, or improvement is made as may
be necessary for the convenient use and occupation of such building,
structure, or improvement, and the same shall be subject to such liens. In
case any such building occupies two or more lots or other subdivisions of
land, such several lots or other subdivisions shall be deemed one lot for
the purposes of this article, and the same rule shall hold in cases of any
other such improvements that are practically indivisible, and shall attach
to all machinery and other fixtures used in connection with any such lands,
buildings, mills, structures, or improvements.
(2) When the lien is for work done or labor or material furnished for any
entire structure, erection, or improvement, such lien shall attach to such
building, erection, or improvement for or upon which the work was done, or
laborers or materials furnished in preference to any prior lien or
encumbrance, or mortgage upon the land upon which the same is erected or
put, and any person enforcing such lien may have such building, erection,
or improvement sold under execution and the purchaser at any such sale may
remove the same within thirty days after such sale.
(3) Any lien provided for by this article shall extend to and embrace any
additional or greater interest in any of such property acquired by such
owner at any time subsequent to the making of the contract or the
commencement of the work upon such structure and before the establishment
of such lien by process of law, and shall extend to any assignable,
transferable, or conveyable interest of such owner or reputed owner in the
land upon which such building, structure, or other improvement is erected
or placed.
(4) Whenever any person furnishes any laborers or materials or performs
any labor, for the erection, construction, addition to, alteration, or
repair of two or more buildings, structures, or other improvements, when
they are built and constructed by the same person and under the same
contract, it is lawful for the person so furnishing such laborers or
materials or performing such labor to divide and apportion the same among
the buildings, structures, or other improvements in proportion to the value
of the laborers or materials furnished for and the labor performed upon or
for each of said buildings, structures, or other improvements and to file
with his or her lien claim therefor a statement of the amount so
apportioned to each building, structure, or other improvement. This lien
claim when so filed may be enforced under the provisions of this article in
the same manner as if said laborers or materials had been furnished and
labor performed for each of said buildings, structures, or other
improvements separately; but if the cost or value of such labor, laborers,
or materials cannot be readily and definitely divided and apportioned among
the several buildings, structures, or other improvements, then one lien
claim may be made, established, and enforced against all such buildings,
structures, or other improvements, together with the ground upon which the
same may be situated, and in such case for the purposes of this article,
all such buildings, structures, and improvements shall be deemed one
building, structure, or improvement, and the land on which the same are
situated as one tract of land.
38-22-105. Property subject to lien — notice.
(1) Any building, mill, manufactory, bridge, ditch, flume, aqueduct,
reservoir, tunnel, fence, railroad, wagon road, tramway, and every
structure or other improvement mentioned in this article, constructed,
altered, added to, removed to, or repaired, either in whole or in part,
upon or in any land with the knowledge of the owner or reputed owner of
such land, or of any person having or claiming an interest therein,
otherwise than under a bona fide prior recorded mortgage, deed of trust, or
other encumbrance, or prior lien shall be held to have been erected,
constructed, altered, removed, repaired, or done at the instance and
request of such owner or person, including landlord or vendor, who by lease
or contract has authorized such improvements, but so far only as to subject
his interest to a lien therefor as provided in this section.
(2) Such interest so owned or claimed shall be subject to any lien given
by the provisions of this article, unless such owner or person within five
days after obtaining notice of the erection, construction, alteration,
removal, addition, repair, or other improvement, gives notice that his or
her interests shall not be subject to any lien for the same by serving a
written or printed notice to that effect, personally, upon all persons
performing labor or furnishing laborers, materials, machinery, or other
fixtures therefor, or within five days after such owner or person has
obtained notice of the erection, construction, alteration, removal,
addition, repair, or other improvement, or notice of the intended erection,
construction, alteration, removal, addition, repair, or other improvement
gives such notice by posting and keeping posted a written or printed notice
in some conspicuous place upon said land or upon the building or other
improvements situate thereon.
(3) This section shall not apply to coowners of unincorporated canals,
ditches, flumes, aqueducts, and reservoirs nor to the enforcement of
article 23 of this title. The provisions of this section shall not be
construed to apply to any owner or person claiming any interest in such
property, the interest of whom is subject to a lien pursuant to the
provisions of section 38-22-101.
38-22-106. Priority of lien — attachments.
(1) All liens established by virtue of this article shall relate back to
the time of the commencement of work under the contract between the owner
and the first contractor, or, if said contract is not in writing, then such
liens shall relate back to and take effect as of the time of the
commencement of the work upon the structure or improvement, and shall have
priority over any lien or encumbrance subsequently intervening, or which
may have been created prior thereto but which was not then recorded and of
which the lienor, under this article, did not have actual notice. Nothing
contained in this section, however, shall be construed as impairing any
valid encumbrance upon any such land duly made and recorded prior to the
signing of such contract or the commencement of work upon such improvements
or structure.
(2) No attachment, garnishment, or levy under an execution upon any money
due or to become due to a contractor from the owner or reputed owner of any
such property subject to any such lien shall be valid as against such lien
of a subcontractor or materialmen, and no such attachment, garnishment, or
levy upon any money due to a subcontractor or materialmen of the second
class, as provided in section 38-22-108 (1)(b), from the contractor shall
be valid as against any lien of a laborer employed by the day or piece, who
does not furnish any material as classified in this article.
38-22-108. Rank of liens.
(1) Every person given a lien by this article whose contract, either
express or implied, is with the owner or reputed owner or owner's agent or
other representative, is a principal contractor and all others are
subcontractors; and in every case in which different liens are claimed
against the same property, the rank of each lien, or class of liens, as
between the different lien claimants, shall be declared and ordered to be
satisfied in the decree or judgment in the following order named:
(a) The liens of all those who were laborers or mechanics working by the
day or piece, but without furnishing material therefor, either as principal
or subcontractors;
(b) The liens of all other subcontractors and of all materialmen whose
claims are either entirely or principally for laborers, materials,
machinery, or other fixtures, furnished either as principal contractors or
subcontractors;
(c) The liens of all other principal contractors and all moneys realized
in any actions for the satisfaction of liens against the same improvements
or structures shall be paid out in the order above designated.
38-22-109. Lien statement.
(1) Any person wishing to use the provisions of this article shall file
for record, in the office of the county clerk and recorder of the county
wherein the property, or the principal part thereof, to be affected by the
lien is situated, a statement containing:
(a) The name of the owner or reputed owner of such property, or in case
such name is not known to him, a statement to that effect;
(b) The name of the person claiming the lien, the name of the person who
furnished the laborers or materials or performed the labor for which the
lien is claimed, and the name of the contractor when the lien is claimed by
a subcontractor or by the assignee of a subcontractor, or, in case the name
of such contractor is not known to a lien claimant, a statement to that
effect;
(c) A description of the property to be charged with the lien, sufficient
to identify the same; and
(d) A statement of the amount due or owing such claimant.
(2) Such statement shall be signed and sworn to by the party, or by one of
the parties, claiming such lien, or by some other person in his or their
behalf, to the best knowledge, information, and belief of the affiant; and
the signature of any such affiant to any such verification shall be a
sufficient signing of the statement.
(3) In order to preserve any lien for work performed or laborers or
materials furnished, there must be a notice of intent to file a lien
statement served upon the owner or reputed owner of the property or the
owner's agent and the principal or prime contractor or his or her agent at
least ten days before the time of filing the lien statement with the county
clerk and recorder. Such notice of intent shall be served by personal
service or by registered or certified mail, return receipt requested,
addressed to the last known address of such persons, and an affidavit of
such service or mailing at least ten days before filing of the lien
statement with the county clerk and recorder shall be filed for record with
said statement and shall constitute proof of such service.
(4) All such lien statements claimed for labor and work by the day or
piece, but without furnishing laborers or materials therefor, must be filed
for record after the last labor for which the lien claimed has been
performed and at any time before the expiration of two months next after
the completion of the building, structure, or other improvement.
(5) Except as provided in subsections (10) and (11) of this section, the
lien statements of all other lien claimants must be filed for record at any
time before the expiration of four months after the day on which the last
labor is performed or the last laborers or materials are furnished by such
lien claimant.
(6) New or amended statements may be filed within the periods provided in
this section for the purpose of curing any mistake or for the purpose of
more fully complying with the provisions of this article.
(7) No trivial imperfection in or omission from the said work or in the
construction of any building, improvement, or structure, or of the
alteration, addition to, or repair thereof, shall be deemed a lack of
completion, nor shall such imperfection or omission prevent the filing of
any lien statement or filing of or giving notice, nor postpone the running
of any time limit within which any lien statement shall be filed for record
or served upon the owner or reputed owner of the property or such owner's
agent and the principal or prime contractor or his or her agent, or within
which any notice shall be given. For the purposes of this section,
abandonment of all labor, work, services, and furnishing of laborers or
materials under any unfinished contract or upon any unfinished building,
improvement, or structure, or the alteration, addition to, or repair
thereof, shall be deemed equivalent to a completion thereof. For the
purposes of this section, "abandonment" means discontinuance of all labor,
work, services, and furnishing of laborers or materials for a three-month
period.
(8) Subject to the prior termination of the lien under the provisions of
section 38-22-110, no lien claimed by virtue of this article shall hold the
property, or remain effective longer than one year from the filing of such
lien, unless within thirty days after each annual anniversary of the filing
of said lien statement there is filed in the office of the county clerk and
recorder of the county wherein the property is located an affidavit by the
person or one of the persons claiming the lien, or by some person in his
behalf, stating that the improvements on said property have not been
completed.
(9) Upon the filing of the notice required and the commencement of an
action, within the time and in the manner required by said section
38-22-110, no annual affidavit need be filed thereafter.
(10) Within the applicable time period provided in subsections (4) and
(5) of this section and subject to the provisions of section 38-22-125,
any lien claimant granted a lien pursuant to section 38-22-101 may file
with the county clerk and recorder of the county in which the real
property is situated a notice stating the legal description or address or
such other description as will identify the real property; the name of
the person with whom he has contracted; and the claimant's name,
address, and telephone number. One such notice may be filed upon more
than one property, and, in the case of a subdivision, one notice may
describe only the part thereof upon which the claimant has or will obtain
a lien pursuant to section 38-22-101. The filing of said notice shall
serve as notice that said person may thereafter file a lien statement and
shall extend the time for filing of the mechanic's lien statement to four
months after completion of the structure or other improvement or six
months after the date of filing of said notice, whichever occurs first.
Unless sooner terminated as provided in subsection (11) of this section,
the notice provided for in this subsection (10) shall automatically
terminate six months after the date said notice is filed. In the event
that said structure or other improvements have not been completed prior
to the termination of said notice, a claimant, prior to said termination
date, may file a new or amended notice which shall remain effective for
an additional period of six months after the date of filing or four
months after the date of completion of said structure or other
improvements, whichever occurs first.
(11) Upon termination of agreement to provide labor, laborers, or
materials, the owner, or someone in such owner's behalf, may demand from
the person filing said notice a termination of said notice, which
termination shall identify the properties upon which labor has not been
performed or to which laborers or materials have not been furnished and as
to which said notice is terminated. Upon the filing of said termination in
the office of the county clerk and recorder in the county wherein said
property is situated, such notice no longer constitutes notice as provided
in subsection (10) of this section as to the property described in said
termination.
(12) The notices provided for in subsections (10) and (11) of this
section shall be recorded in the office of the county clerk and recorder
of the county wherein the real property is located.
38-22-110. Action commenced within six months.
No lien claimed by virtue of this article, as against the owner of the
property or as against one primarily liable for the debt upon which the
lien is based or as against anyone who is neither the owner of the property
nor one primarily liable for such debt, shall hold the property longer than
six months after the last work or labor is performed, or laborers or
materials are furnished, or after the completion of the building,
structure, or other improvement, or the completion of the alteration,
addition to, or repair thereof, as prescribed in section 38-22-109, unless
an action has been commenced within that time to enforce the same, and
unless also a notice stating that such action has been commenced is filed
for record within that time in the office of the county clerk and recorder
of the county in which said property is situate. Where two or more liens
are claimed of record against the same property, the commencement of any
action and the filing of the notice of the commencement of such action
within that time by any one or more of such lien claimants in which action
all the lien claimants as appear of record are made parties, either
plaintiff or defendant shall be sufficient.
38-22-111. Joinder of parties — consolidation of actions.
(1) Any number of persons claiming liens against the same property and not
contesting the claims of each other may join as plaintiffs in the same
action, and when separate actions are commenced, the court may consolidate
them upon motion of any party in interest or upon its own motion.
(2) Upon such procedure for consolidation, one case shall be selected with
which the other cases shall be incorporated, and all the parties to such
other cases shall be made parties plaintiff or defendant as the court may
designate in said case so selected. All persons having claims for liens,
the statements of which have been filed as provided in this article, shall
be made parties to the action.
(3) Those claiming liens who fail or refuse to become parties plaintiff,
or for any reason have not been made such parties, shall be made parties
defendant. Any party claiming a lien, not made a party to such action, at
any time within the period provided in section 38-22-109, may be allowed to
intervene by motion, upon cause shown, and may be made a party defendant on
the order of the court, which shall fix by such order the time for such
intervenor to plead or otherwise proceed. The pleadings and other
proceedings of such intervenor thus made a party shall be the same as
though he had been an original party. Any defendant who claims a lien, in
answering, shall set forth by cross complaint his claim and lien. Likewise
such defendant may set forth in said answer defensive matter to any claim
or lien of any plaintiff or codefendant or otherwise deny such claim or
lien. The owner of the property to which such lien has attached, and all
other parties claiming of record any right, title, interest, or equity
therein, whose title or interests are to be charged with or affected by
such lien, shall be made parties to the action.
38-22-112. Allegations of complaint.
It is sufficient to allege in the complaint in relation to any party
claiming a lien whom it is desired to make a defendant, that such party
claims a lien under this article upon the property described; and in case
of the intervention of parties, or of the making of new parties, or of the
consolidation of actions, so that the issues are in any manner changed or
increased, any party to the action shall be allowed to amend his pleadings,
or file new pleadings, as the nature of the case may require.
38-22-113. Hearing — judgment — summons — defense.
(1) The court, whenever the issues in such case are made up, shall advance
such cause to the head of the docket for trial and may proceed to hear and
determine said liens and claims or may refer the same to a magistrate to
ascertain and report upon said liens and claims and the amounts justly due
thereon.
(2) Judgments shall be rendered according to the rights of the parties.
The various rights of all the lien claimants and other parties to any such
action shall be determined and incorporated in one judgment or decree. Each
party who establishes his claim under this article shall have judgment
against the party personally liable to him for the full amount of his claim
so established, and shall have a lien established and determined in said
decree upon the property to which his lien has attached to the extent
stated in this section.
(3) Proceedings to foreclose and enforce mechanics' liens under this
article are actions in rem, and service by publication may be obtained
against any defendant therein in a manner as provided by law, and personal
judgment against the principal contractor or other person personally liable
for the debt for which the lien is claimed shall not be requisite to a
decree of foreclosure in favor of a subcontractor or materialman.
(4) In such proceedings, it shall be an affirmative defense that the owner
or some person acting on the owner's behalf has paid an amount sufficient
to satisfy the contractual and legal obligations of the owner, including
the initial purchase price or contract amount plus any additions or change
orders, to the principal contractor or any subcontractor for the purpose of
payment to the subcontractors or suppliers of laborers or materials or
services to the job, when:
(a) The property is an existing single-family dwelling unit;
(b) The property is a residence constructed by the owner or under a
contract entered into by the owner prior to its occupancy as his primary
residence; or
(c) The property is a single-family, owner-occupied dwelling unit,
including a residence constructed and sold for occupancy as a primary
residence. This paragraph (c) shall not apply to a developer or builder of
multiple residences except for the residence that is occupied as the
primary residence of the developer or builder.
38-22-114. Disposition of proceeds — execution.
(1) The court shall cause said property to be sold in satisfaction of said
liens and costs of suit as in case of foreclosure of mortgages; and any
party in whose favor a judgment for a lien is rendered, may cause the
property to be sold within the time and in the manner provided for sales of
real estate on executions issued out of any court of record, and there
shall be the same rights of redemption as are provided for in the case of
sales of real estate on executions. And if the proceeds of such sale, after
the payment of costs, are not sufficient to satisfy the whole amount of
such liens included in the decree of sale, then such proceeds shall be
apportioned according to the rights of the several parties. In case the
proceeds of sale amount to more than the sum of said liens and all costs,
then the remainder shall be paid over to the owner of said property; and
each party whose claim is not fully satisfied in the manner provided in
this section shall have execution for the balance unsatisfied against the
party personally liable, as in other cases.
(2) In the first instance without a previous sale of said property to
which such liens have attached, an execution may issue in behalf of any
such lien claimant for the full amount of his claim against the party
personally liable, and he may thereafter enforce such lien for any balance
of such judgment remaining unsatisfied. A transcript of the docket of said
judgment and decree may be filed with the county clerk and recorder of the
county where such property is situated or in any other county, and
thereupon said judgment and decree shall become a lien upon the real
property in such county of each party so personally liable in favor of any
such lien claimant holding any such judgment against any such party so
personally liable, as in other cases of recording transcripts of judgment.
38-22-115. Parties to action.
Principal contractors and all other persons personally liable for the debt
for which the lien is claimed shall be made parties to actions to enforce
liens under this article, and service of summons shall be made either
personally or by publication in the same manner and with like effect as is
provided by law in cases of attachment and other proceedings in rem.
38-22-116. Costs.
The court shall divide the costs between the parties liable therefor,
according to the justice of the case.
38-22-118. Satisfaction of lien — failure to release.
The claimant of any such lien, the statement of which has been filed, on
the payment of the amount thereof, together with the costs of filing and
recording such lien, and the acknowledgment of satisfaction, and accrued
costs of suit in case a suit has been brought thereon, at the request of
any person interested in the property charged therewith, shall enter or
cause to be entered an acknowledgment of satisfaction of the same of
record, and if he neglects or refuses to do so within ten days after the
written request of any person so interested, he shall forfeit and pay to
such person the sum of ten dollars per day for every day of such neglect or
refusal, to be recovered in the same manner as other debts. A valid tender
of payment, refused by any such claimant, shall be equivalent to a payment
for the purpose of this section. Any such statement may be satisfied of
record in the same manner as mortgages.
38-22-119. Agreement to waive — effect.
No agreement to waive, abandon, or refrain from enforcing any lien
provided for by this article shall be binding except as between the parties
to such contract. The provisions of this article shall receive a liberal
construction in all cases.
38-22-129. Principal contractor may provide bond prior to commencement of
work.
(1) Except as provided in subsection (4) of this section, the provisions
of section 38-22-101 (1) shall not apply if, at the commencement of any
work upon any construction project for the improvement of real property as
described in section 38-22-101 (1), a performance bond and a labor and
materials payment bond, each in an amount equal to one hundred fifty
percent of the contract price, are executed by the principal contractor and
one or more corporate sureties authorized and qualified to do business in
this state, for the protection of all contractors, subcontractors,
materialmen, and laborers supplying labor, laborers, or material in the
prosecution of the work on such construction project for the use of each
contractor, subcontractor, materialman, or laborer.
(2) All subcontractors, materialmen, mechanics, and others who would
otherwise be entitled to a lien under the provisions of section 38-22-101
(1) shall have a right of action directly against the principal contractor
and his surety for the full amount due. Such action shall be brought within
six months after completion of the last work on such project.
(3) In order to be effective, a notice of such bond shall be filed with
the county clerk and recorder of the county wherein such project is situate
prior to the commencement of any work on the project and shall be indexed
according to both the street address and the legal description of the
property to be improved. The principal contractor shall post a notice on
the property that notice of such bond has been filed with the county clerk
and recorder and shall make available copies of the bond to every
contractor, subcontractor, materialman, mechanic, or laborer upon request.
(4) If any claimant files for record a lien statement or other notice,
pursuant to section 38-22-109, such lien shall be deemed released upon the
filing for record of a notice executed by both the principal and all
sureties acknowledging the existence of the bond furnished for such project
and that said lien claimant is entitled to claim the benefits of said bond.
Such acknowledgment shall be executed by the principal and sureties upon
demand of the owners or any person filing a lien statement. Said notice may
be delivered personally to the surety or its agent and the principal or his
agent or may be mailed by certified or registered mail. If the principal
and all sureties on any such bonds fail or refuse to execute and record
such acknowledgment within thirty days after written demand is made upon
them, all lien claimants shall be entitled to enforce their lien claims in
the same manner as if no bond had been filed as provided in subsection (1)
of this section.
(5) In the event that any corporate surety on any bond filed pursuant to
the provisions of subsection (1) of this section becomes subject to an
order for relief under the federal bankruptcy code of 1978, title 11 of the
United States Code, is the subject of any state or federal corporate
reorganization proceedings, makes any assignment for the benefit of
creditors, or otherwise is unable to meet its financial obligations as they
become due, the provisions of this section shall not apply, and any lien
claimant shall be entitled to enforce such lien claim in the same manner as
if no bond had been filed as provided in subsection (1) of this section.
38-22-130. Payment of claims by surety.
(1) Subcontractors, materialmen, mechanics, and others who have claims
aggregating two thousand dollars or less each on construction projects for
the improvement of real property as described in section 38-22-101 (1) for
which a bond was executed pursuant to section 38-22-129 shall serve upon
the principal contractor and his surety an affidavit, supported by all
reasonably available documentary evidence, that a claimant has furnished
labor or materials used or performed in the prosecution of the work on such
project, that he has been unpaid therefor, and the amount of such claim. If
after forty-five days such affidavit remains uncontroverted, such surety
shall pay to such claimant forthwith the full value of his claim.
(2) Service of such affidavit may be accomplished by certified or
registered mail, by personal delivery to such person, or by leaving a copy
at his residence or at his place of business with some person in charge.
38-22-131. Substitution of bond allowed.
(1) Whenever a mechanic's lien has been filed in accordance with this
article, the owner, whether legal or beneficial, of any interest in the
property subject to the lien may, at any time, file with the clerk of the
district court of the county wherein the property is situated a corporate
surety bond or any other undertaking which has been approved by a judge of
said district court.
(2) Such bond or undertaking plus costs allowed to date shall be in an
amount equal to one and one-half times the amount of the lien plus costs
allowed to date and shall be approved by a judge of the district court with
which such bond or undertaking is filed.
(3) The bond or undertaking shall be conditioned that, if the lien
claimant shall be finally adjudged to be entitled to recover upon the claim
upon which his lien is based, the principal or his sureties shall pay to
such claimant the amount of his judgment, together with any interest,
costs, and other sums which such claimant would be entitled to recover upon
the foreclosure of the lien.
38-22-132. Lien to be discharged.
Notwithstanding the provisions of section 38-22-119, upon the filing of a
bond or undertaking as provided in section 38-22-131, the lien against the
property shall be forthwith discharged and released in full, and the real
property described in such bond or undertaking shall be released from the
lien and from any action brought to foreclose such lien, and the bond or
undertaking shall be substituted. The clerk of the district court with
which such bond or undertaking has been filed shall issue a certificate of
release which shall be recorded in the office of the clerk and recorder of
the county wherein the original mechanic's lien was filed, and the
certificate of release shall show that the property has been released from
the lien and from any action brought to foreclose such lien.
38-22-133. Action to be brought on bond or undertaking.
When a bond or undertaking is filed as provided in section 38-22-131, the
person filing the original mechanic's lien may bring an action upon the
said bond or undertaking. Such action shall be commenced within the time
allowed for the commencement of an action upon foreclosure of the lien, and
the statute of limitations applicable to a lien foreclosure shall apply to
the action upon the bond or undertaking as it would had no bond or
undertaking been filed.
