Mechanic’s Lien: Exaggeration
Under Colorado law, a mechanic’s lien claimant who overstates the amount of his lien in his recorded lien statement may be held to have forfeited all of his lien rights. This risk to too big to overlook.
Actually, there are two separate provisions of the Colorado mechanic’s lien statute which threaten forfeiture if the lien claimant “knowingly” files a lien in a dollar amount more than the amount reasonably due. The other and older statutory provision requires that such overstatement must have been with the intent to cheat or defraud someone.
Students of mechanic’s lien law have often wondered why the later provision was added by the legislature without reference to the earlier statutory section covering the same subject matter. We ponder over whether courts are at liberty to apply one section or the other at will, or whether the legislative oversight requires the reading of both sections together.
The newer section is tougher on the lien claimant because it only appears to require a “knowing” overstatement while the earlier section requires bad intentions.
In a recent decision, the Colorado Court of Appeals appears to have resolved the conflict by reading both provisions together and therefore requiring a knowing overstatement of the lien amount with intent to cheat or defraud someone. Even though the dollar amount awarded the lien claimant by the court was less than his lien amount and the lien amount also included lost profits (not recoverable in the lien context) the court ruled that these circumstances did not justify forfeiture of lien rights. Concrete Contractors, Inc. v. E.B. Roberts Construction Co., 704 P.2d 859 (Colo. App. 1982).
Readers are cautioned that the rule in that case still remains subject to review by the Colorado Supreme Court and that court has not yet ruled on this particular question.
Mechanic’s lien claimants should not interpret the case mentioned above BE as any safety net for overstatement of their claims. Instead, they should take care to include the actual amount due without exaggeration. For lien purposes, the amount recoverable is the reasonable value of the labor, services or materials furnished. Nothing else!
1 Editor’s Note: See the following article; Inflated Mechanic’s Liens, page F-30
