How to File a Bond Claim or Mechanic’s Lien in Colorado
Each state has its own set of laws and regulations pertaining to public construction projects and their required bonds, often known as a Little Miller Act. In Colorado, the Little Miller Act protects Colorado construction workers and contractors, and stipulates that all public works projects valued at more than $50,000 and all state-funded projects worth more than $150,000 must obtain both performance and payment bonds for the job. Colorado surety bond requirements dictate that they must be valued at a minimum of 50% of the total contract’s worth.
When one party fails to live up to their contractual duties, these payment bonds protect the other parties involved. For subcontractors, material suppliers, and laborers, the payment bond is particularly important. This bond provides protection against any situation in which a prime contractor withholds payment. When this happens, the affected party may make a claim against the bond in order to secure their wages. However, it’s important to note that suppliers to suppliers are not covered under Colorado bond claim laws.
To help contractors and subcontractors most effectively manage the Colorado construction projects they are involved in, we’ve created a unique construction claims document and communication platform that allows you to submit required notices and claims documents needed to secure the payment you are due.
Filing a Colorado Bond Claim
Due to the differences in each state’s Little Miller Act, the process for filing a bond claim can vary quite a bit based on your location. This is certainly the case when it comes to Colorado.
While most states would require you to send a preliminary notice at the onset of a project in order to secure your right to make a claim against a surety bond, Colorado does not. Filing a notice of intent to make a bond claim also isn’t required by state law, but you should still consider filing one anyway. This notice can help bring your situation to the attention of the surety company and/or project owner, who will likely attempt to remedy the situation before it proceeds to an actual claim.
If the notice of intent isn’t enough to secure your payment, you would then move on to filing an actual claim. In many situations, filing a claim will result in receiving your pay, but this is not always the case. Sometimes, you may need to take the matter to court.
Should you make a claim and still have payment withheld, the next option available to you would be to file a lawsuit. However, in Colorado, this must be done relatively quickly. The Colorado bond statute requires any legal enforcement of a bond claim to take place within six months of the project’s completion.
What Is a Surety Bond in Colorado?
Colorado bonds are agreements between three parties (the surety company, the principal, and the obligee) that guarantee that each part will live up to their contractual duties. Should the principal, most often the prime contractor, fail to pay the obligee, the surety company will use the bond to pay the obligee and then to charge the principal for the loss.
How Do You Get Bonded in Colorado?
Being bonded simply means that you have obtained a surety bond. In order to purchase a surety bond, you need to contact a local insurance or surety company and apply for a bond. They will then provide you with quotes, and you can decide from there which option is right for you. In general, most people prefer to purchase bonds from a surety company due to their extensive experience in this area.
How Much Does a Surety Bond Cost in Colorado?
The price of a surety bond can vary quite a bit, but it’s typically between 1% and 3% of the bond’s total value. Surety company underwriters will determine the cost of your bond in part based on your credit score. A great credit score will likely result in a much lower price for the bond than a low credit score would.
Filing a Colorado Mechanic’s Lien
While filing bond claims is a great way to secure your payment for a project, it’s not the only course of action available to you in Colorado. Mechanic’s liens and contract fund liens are other effective ways of making sure you’re paid for the labor and/or materials you supply to a project. However, things can quickly become complicated when it comes to a mechanic’s lien. Colorado notice of intent forms need to filed, deadlines need to be observed, and all of this is happening while you still haven’t been paid.
What Is a Mechanic’s Lien in Colorado?
A Colorado mechanic’s lien is a document that notifies the property owner that you are unpaid for labor or material you provided to the project. Placing a lien on a property makes it significantly harder for the owner to finance or sell the property, which encourages them to pay you for your work as soon as possible.
How Do You File a Lien in Colorado?
There are a few steps you must follow in order to file a mechanic’s lien. Colorado requires you to first serve a Notice of Intent to Lien to the property owner ten days prior to filing the lien itself. This should be done via registered mail so that you have proof that the notice was served, which also must be filed with the Colorado intent to lien form.
After you have filed the Notice of Intent to Lien form, Colorado will then require you to fill out a lien form. There are separate lien forms to fill out based on your role on the project, whether you are a contractor, subcontractor, or material supplier. Colorado lien laws can be strict in this regard, so be sure to double-check that you have filled out the correct form. This form must also be notarized before filing.
Once you’ve filled out the proper form, you would next serve the lien to the property owner. Though this is technically not required by Colorado law, it will often be enough to convince the property owner to pay you. If not, you would then file the lien with the appropriate county office.
How Long Do You Have to File a Lien in Colorado?
The deadline to file Colorado liens will vary slightly based upon your role on the project. When it comes to filing a contractor lien, the Colorado mechanic’s lien statute states that any potential claimant, with the exception of general laborers, has four months after finishing their work in which to file a lien. If you are a laborer who did not supply any materials to the project, the lien must be filed after your last day of work but within two months of the project’s completion.
How Long Does a Mechanic’s Lien Last in Colorado?
Colorado mechanic’s liens last for six months from when the project reached completion or the date you last supplied labor and/or materials to the project, whichever came later. In most cases, as the project is normally finished by the time one is done supplying work, it’s measured from the date the project was finished.
How Do I Remove a Mechanic’s Lien in Colorado?
Once you have received payment from the lien you placed on the property, you’ll be required to file a lien release. You have ten days from the date the property owner serves you with a written request to do so. Failing to file a lien release within the given time frame can result in the claimant having to pay $10 a day until it’s done.
Get Help With Your Colorado Bond Claim
Between the forms, filing, deadlines, and various state laws, it’s easy for things to fall through the cracks or be done incorrectly when filing your bond claim. But when you work with ConstructionDisputes.com, our streamlined bond claim process and knowledgeable bond specialists will help you make sure that every claim you file is 100% in accordance with state laws, regulations, and bonding company requirements. We offer several pricing plans so you can pick the one that’s right for you. Get started now: File your claim for free!