How to File a Lien on a Business in Colorado
The best way to receive money owed to you by a Colorado business, in the event the business refuses to pay, is to file a lien against it. A lien represents your legal claim to what is owed. The first step to take to file a lien is to determine the type of lien appropriate to your situation. Colorado law is specific in the types of notice you need to provide the business and the timing of different aspects of the lien process. Pay close attention to the details to be successful in placing a lien on a Colorado business.
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Mechanic's Lien
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If you or your business provides construction materials, equipment or labor to the business -- for either new construction or improvements -- file a mechanic’s lien. This is typically done before beginning the work by filing a pre-construction contract with the recorder in the county in Colorado in which the business is located. In lieu of a contract, file a memorandum, clearly describing the scope of work; a property description; and the amount owed to you by the business at the conclusion of the job. You also must provide written notice, any time before or during the project, to the business owner outlining the type of materials or labor you are providing and the value of the materials or labor. This puts the business on notice that you are eligible to file a lien should you not be paid. To actually file the lien, serve both the principal contractor and the business with a Notice of Intent to File a Lien Statement. Wait 10 days, and then file a lien statement at the county clerk and recorder’s office.
Judgment Lien
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To obtain a judgment lien against a Colorado business you must successfully sue it in civil court and obtain a judgment against the business. The judgment is an order by the court for payment. If the business does not pay the judgment, you may place a lien on only the real estate owned by the business and you will receive your payment out of the proceeds from the sale of the real estate. File the judgment at the county recorder’s office in the county where the business’s real estate is located and any counties where the business may own real estate in the future. This officially attaches the lien to the business. You also must serve the business with notice that you have filed the lien. Mail the notice via certified mail within 10 days of being issued the lien.
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Timing
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Judgment liens obtained in Colorado District Courts are valid for 20 years and renewable for an additional 20 years. You must file a motion with the court to renew the lien. Colorado county court liens must be renewed every six years. Should you miss the renewal deadline, the lien may become unenforceable and you will not be able to collect what the business owes you. To avoid this, find a way to remind yourself as the deadline draws near.
Considerations
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While obtaining what is owed you by a Colorado business is swifter with a mechanic’s lien, neither type of lien provides instant money. When you file a judgment lien, check to see if there are other liens on property the business owns. Your lien will most likely be subordinate to those placed before yours. Hire or consult with a lawyer to ensure that you meet all the requirements and deadlines involved in filing a lien against a Colorado business.
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References
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