Opinion ID: 2638092
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Heading: The General Mechanics' Lien Laws

Text: A mechanics' lien is a statutorily-created right to file a claim against property, available to a broad category of persons who furnish labor or materials adding value to that property. § 38-22-101(1), C.R.S. (2006). Section 38-22-101 is titled in part: liens in favor of whom. It states that liens are created only in favor of those persons who furnish supplies or labor for value to property: [E]very person who furnishes or supplies laborers . . . materialmen, contractors, subcontractors, builders . . . shall have a lien upon the property upon which they have furnished laborers or supplied machinery, tools, or equipment or rendered service . . . for the value of such laborers, machinery, tools, or equipment supplied. . . . § 38-22-101(1) (emphasis added). The General Assembly has, by this language, defined a lien and identified who may have a lien. A lien is a security interest in property; those who have a lien are laborers and material suppliers who have added value to that property. See Barnard v. McKenzie, 4 Colo. 251, 253 (1878) (stating that [t]he leading idea [of Colorado's mechanics' lien laws is] to secure the mechanic and materialmen upon values they have directly contributed to create). Furthermore, a lien is created at the commencement of the work, not at the time of enforcement of the lien. See § 38-22-106, C.R.S. (2006) (requiring that all liens relate back to the time of the commencement of the work); Sontag v. Abbott, 140 Colo. 351, 358, 344 P.2d 961, 964 (1959) (liens begin at the commencement of the work); cf. 1C Cathy Stricklin Krendl & James R. Krendl, Colo. Prac. Series, Methods of Practice § 48.6 (5th ed.2006) (noting that to preserve a lien, a claimant must file notice and then perfect the lien). A lien created at the commencement of work preexists the claim that is made to enforce the lien. See § 38-22-105.5(2), C.R.S. (2006) (including the words on the notice form to property owners [pursuant to lien law] you [may] have an affirmative defense in any action to enforce a lien ) (emphasis added). For this reason, the mechanics' lien statutes use the word lien to describe something different from claims to enforce the lien. For instance, section 38-22-101(5) talks about claimants who establish the right to a lien or claim under any of the provisions of this article. § 38-22-101(5), C.R.S. (2006) (emphasis added). Another example illustrates this point further: section 38-22-103(4) describes what a laborer or material supplier may file with his or her lien claim.  § 38-22-103(4), C.R.S. (2006) (emphasis added). Here the statute qualifies the word lien with claim to describe the distinct status of the lien (i.e., it has now been claimed and filed). In this way, the General Assembly meant for a lien to be defined by section 38-22-101, and for the remaining provisions to describe the process of enforcing the lien. Once a lien has been created, the claim is an equitable enforcement action to enforce the lien. We have long construed our mechanics' lien laws liberally, according to equitable principles. Compass Bank v. Brickman Group, Ltd., 107 P.3d 955, 958 (Colo.2005) (citing Buerger Inv. Co. v. B.F. Salzer Lumber Co., 77 Colo. 401, 406-07, 237 P. 162, 164-65 (1925) and Darien v. Hudson, 134 Colo. 213, 302 P.2d 519 (1956)). The mechanics' lien laws are liberally construed because they were designed to prevent the unjust enrichment of property owners. Compass Bank, 107 P.3d at 958. Consistent with these equitable principles and the General Assembly's purpose, we avoid needless and inequitable losses of a mechanic's or material supplier's security interest. Id. The General Mechanics' Lien statutes created the lien claim process over one hundred years ago. See Williams v. Uncompahgre Canal Co., 13 Colo. 469, 22 P. 806 (1889). In 1975, two additional claims were created to protect subcontractors, laborers, or material suppliers: (1) claims may be made against a trust fund created by section 38-22-127, C.R.S. (2006) [4] the Trust Fund Statute; and (2) a contractor can post a bond and a subcontractor, laborer, or material supplier can either claim against the lien or the bond pursuant to section 38-22-129(2), C.R.S. (2006). 1975 Colo. Sess. Laws 1420, 1420-26. All three alternatives allow subcontractors, laborers, or material suppliers to satisfy legitimate claims for compensation and are merely separate methods for satisfying those claims. First Commercial Corp. Inc. v. First Nat'l Bancorp., 572 F.Supp. 1430, 1434 (D.Colo.1983); Lafarge West, Inc. v. Riley (In re Riley), No. 02-29529, 2004 WL 2300460, at  (Bankr.D.Colo.2004); Michael E. Romero, The Mechanics' Lien Trust Fund Statute: An Underused Tool in Civil Litigation and Bankruptcy Cases, 31 Colo. Law. 55, 57 (2002). Unlike lien claims, which are asserted against property, these newer trust fund and bond claims are made against contractors. In this way, the mechanics' lien laws form three separate methods for achieving one overall purpose: ensuring that laborers and material suppliers are paid for their contributions to the improvement of property.