Episode Transcript
Speaker 1 00:00:12 Welcome to the podcast. We'll talk about everything related to contractors, construction and information to help you run better businesses.
Speaker 1 00:00:24 Hey guys. Good morning. Welcome back to the quick getting screwed podcast. I always say good morning, because that's why I'm recording this, but good afternoon or good evening to whenever you're listening to this. And today is another episode in my series of tackling, um, what you need to do to file lien in all 50 states. And today we're talking about Colorado. And so the whole purpose of this project is to break down, you know, how to have a Valvoline in all 50 states. And because there are lien rights off of these states, but they're all different. And so if we can dive in and know what they are on the front end and the steps that you have to take. So today I have the resident, uh, expert on Colorado leans Michael Paul in from Colorado. How are you this morning, Michael? Good. Um, you know, happy to be here. So Michael, tell us a little bit about yourself, how long you've been practicing in this area and how kind of, how you got here.
Speaker 2 00:01:16 Yeah. Uh, so I, I practice and so, uh, the national firm, uh, I've been doing construction since 2005 and, uh, got into it, uh, working with subcontractors, uh, uh, filing deans on their behalf. Uh, and they actually, as my practice evolved, I thought we would use the general contractors and developers as well. And I still work with all three, uh, to the
Speaker 1 00:01:49 Awesome siding. Okay. So my first in the list of questions that I asked every state, do you have to be a licensed contractor to work in Colorado?
Speaker 2 00:01:58 Um, and I know that the seats near us required, uh, but,
Speaker 1 00:02:08 And when I asked that I'm at, you know, your normal HPAC guys elect a drill, electrical and plumbing still have to be licensed within their trades, but Colorado doesn't have an extra, like every contractor has gotta be licensed in order to get paid or have to sign a contract.
Speaker 2 00:02:21 Yeah, that's right. I mean, I know that Mexico is on.
Speaker 1 00:02:29 Awesome. Okay. So then who can have, well, we'll start with private projects. We'll get the public projects towards the end, but who in Colorado can have lien rights.
Speaker 2 00:02:40 Yeah. So the statute, uh, the generally applies to anyone's wise, uh, labor to get needs. It really anything to the construction site, uh, at the request of the owner or the owner's age. So that includes all engineers, other professionals. So I think it's fair to say that, you know, first lady wants to be there, the project.
Speaker 1 00:03:08 Awesome. Cause you hit architects and engineers. What about demolition crews?
Speaker 2 00:03:14 Yes. Yes. That was pretty there as well. Um, it's really, it's funny because the way the statute's written, uh, it's, it's virtually, everyone's going to be an agent of the owner. So, so for example, the subcontractor will request materials used in the construction, so it really passes through to grocery anymore. Uh you're on the site.
Speaker 1 00:03:42 Gotcha. Okay. And so with that, okay. First off, does it matter the actions you have to take to have a Valvoline based on your position? Like if you're a GC or a subcontractor or a material supplier, like the further down the chain is anything different or is it the same?
Speaker 2 00:03:59 It's pretty much the same. I think there is some exceptions. So for example, if we're pretty much a small player on the father and you just provide labor or work or racial period, you have to do that within two months, the completion of the improvement, but for everybody else, it's four months. Other than that one nuance pretty much, it doesn't matter your role. It's going to be the same.
Speaker 1 00:04:35 Gotcha. Okay. So if, you know, I want to preserve my lien rights. What are the, what are the first steps that I need to take?
Speaker 2 00:04:42 Yeah. So the, the agency that you're using, the building department permit, uh, you're gonna need to go to them and have them issue, notice of the property that you would get a notice of intent to file. And so wish that with the notice of intent, that was 10 days before you file it and work with the bullying policy that,
Speaker 1 00:05:07 Okay. So it goes through the permitting department to get out the permitting department, serve them or do you serve the owner? Okay. So you go there and you, do they have paperwork or do you have to fill out your own paperwork?
Speaker 2 00:05:21 You do actually sort of yourself. You just have to show up at,
Speaker 1 00:05:28 Okay. So you fill out the, so they're going to keep a copy. You take your copy and you serve it on the owner. That's right. And okay, so you can do that anytime before 10 days before you file the lien. And then what is the timelines for filing your lien?
Speaker 2 00:05:45 Yeah. So after you do that, if you get a file with the county and there's a lot of requirements that the people will go out, this is pretty standard nationwide, but you know, you just got to put the name down when it's name, description, this position, identify what exactly work you did and to lead it. And the, and you also have to verify that you serve it, but after you do those things, you have four months from the last day we were you to serve
Speaker 1 00:06:19 Four months from the last day of work as any, does it, is it shortened at all by the completion of the project or is it just always four months? Four
Speaker 2 00:06:27 Months. Okay,
Speaker 1 00:06:28 Cool. Um, and so, okay. Once you file your lane with the county clerk and it's got the legal description and the amount you're owed, all the good things that required, do you have to send notice of the lien that was filed to the owner? Yes. Yes. And within what time period is that a timeframe that you need to send it?
Speaker 2 00:06:44 You know, actually doesn't specifically say that in the statute. Um, but typically, obviously in,
Speaker 1 00:06:58 Okay. So the sooner, the better. Okay. So in any part in that process, um, you send your notice, is it required that they receive it to be effective or is just sending it? Okay. And how do, can you send it certified mail? Does it have to be personal delivery? What are your notice requirements? As far as sending notice?
Speaker 2 00:07:19 Uh, it has to be certified. It has to be verified.
Speaker 1 00:07:23 Gotcha. Okay. Um, that's good. Okay, so you do that. And then, so, uh, is there any particular rules that require that are different for homesteads or residential projects at all that apply?
Speaker 2 00:07:34 You know, they, they, the one step I would say is that, you know, when you have a residence of less than two blocks up the four units, uh, the planning department is not required for residential construction or for residents or property continues more than four units. So again, that's just one more exception in,
Speaker 1 00:07:58 So what does that mean? You'd have to go find the information somewhere else or,
Speaker 2 00:08:03 Well, it's just, it's just that when you're talking to the agency, this, uh, uh, permit granted that there is not needed to 4d residences or property continued work for your needs, you don't need to provide those.
Speaker 1 00:08:26 Okay. So you can, you, you, you don't need to provide the notice there. You just had to send it on your own. Okay. Gotcha. Um, and so if I have to file my lien within four months of last work, can I do it earlier than that?
Speaker 2 00:08:41 Yes. We urge that. The one thing I'll say is that they really stick to these deadlines. So if you're even a day late, you have no week. So the sooner you can get this.
Speaker 1 00:08:59 Yeah. And I think, I think that's a good rule of thumb. No matter what state you're in is that there's no penalty for moving early. If you know that there's an issue, just do it. You don't have to wait. And in my experience, the sooner you do it, the more likely it is to get resolved. Is that your same experience?
Speaker 2 00:09:16 Yeah. You're serious. No, you are going to your old money, be paid, walk with the idea that you would walk there.
Speaker 1 00:09:31 Absolutely. And, and, and like also the sooner you do it, the more likely they still have funds owed to the person that owes you money. And when that's the case, it's easier to pay as opposed to when an owner or GC has to pay twice for the same thing.
Speaker 2 00:09:46 Exactly. The last one. Right. I mean, without that, you know, complain fastness. So you definitely won't be
Speaker 1 00:10:01 Absolutely. The squeaky wheel gets paid first. That's always what I say. Okay. So once you have your lien filed, how good, how long is it good for
Speaker 2 00:10:10 Six months then you have to, you have to, while you must be
Speaker 1 00:10:20 So basically a lawsuit to foreclose or take some action in the court to keep that lane alive. That's right. Gotcha. And just curious, how are your courts in Colorado, you guys on schedule, how long does it take to get to trial? How long would a lien case normally take to get decided?
Speaker 2 00:10:38 Uh, no. It was very common to have more than a year. evolving, double that now. And, um, so nothing is happening. The ask point earlier, we were talking about, uh, right away process you get started.
Speaker 1 00:11:14 Gotcha. And so what do you think as, what do you think of our arbitration as an alternative?
Speaker 2 00:11:22 Well, the first arbitration is bigger. However, you are, and expenses involved is something that you really have to take consideration, but, uh, typically you don't see too often, but as use cases, I wouldn't be surprised.
Speaker 1 00:11:56 Yeah. And the other thing that, in my experience that I like about arbitration is that when I go to district court, I have to explain how the construction industry works. And then I have to explain how the law applies. And then I have to explain our facts on top of that. And sometimes when I get an expert that's familiar with con you know, it's an attorney who's familiar with construction. I can just tell the facts.
Speaker 2 00:12:15 Yeah, absolutely.
Speaker 1 00:12:22 Well, and if you don't, you don't realize it when you're, cause you're in construction and our clients are in construction all the time. And so they just think everybody thinks like they do, or everybody knows how the process works. And most people have no idea how this industry runs on credit, what a lien is or why it's important. And so, yeah, it can be exhausting process to, you know, inform everybody. Absolutely. Okay. So then if we file suit within six months, are we allowed to get our attorney's fees back when we filed the enforcement suit?
Speaker 2 00:12:55 Yeah. I do not enter the courtroom pretty vigorously, but there's no provision in the contract or another provisional title. Use your,
Speaker 1 00:13:15 Yeah. So like a material supplier that doesn't have a contract is not going to get as attorney, please. That's right. Gotcha. But even if a subcontractor has it in their contract, the contract's not with the owner, so he's following suit to foreclose. He won't get them either. I think. Yeah. I gotcha. Okay. I'm just, gotcha. What about, could you get your court costs or arbitration costs back
Speaker 2 00:13:40 Arbitration course.
Speaker 1 00:13:45 Gotcha. Gotcha. Gotcha. All right. And then on material suppliers, which this is different in all 50 states, do they have to prove incorporation? What are the, what did they do? Okay. So what do they is delivery enough or delivery tickets?
Speaker 2 00:14:00 Yeah, really valid, as long as into the projects. Um, it's good practice to achieve proof that it was incorporated that feature, but, uh, uh, but one thing is um, can you leave for those, if they're not delivered, for example yes. Here. And it's actually a specific case here in Colorado, not statute, like about it, it says that, um, um, but you at least does delivery. So basically you still have to put it, but
Speaker 1 00:15:05 So if they're refusing it, you should just throw it out. Hey, Hey. Yeah, I'm dropping this, here's your problem now.
Speaker 2 00:15:16 Uh, and so when you do that, you keep just it back. So, I mean
Speaker 1 00:15:45 Gotcha. And so do your notice requirements for that change at all. So, but if we never deliver it or we don't, we haven't delivered it we'd go from like four months from the time it was ordered or the four months it was time being fab done being fabricated.
Speaker 2 00:16:00 Yeah. It's it's it's it's yeah.
Speaker 1 00:16:05 Okay. Gotcha. So at the end of fabrication, probably. Gotcha. All right. So as, as the construction lender at all involved, or can they be involved in lean process in color?
Speaker 2 00:16:16 Uh, yes, they are all parties that,
Speaker 1 00:16:27 So when you go to the permitting office and you get that initial, you filed that original notice of intent. Are they going to be on there to receive notice too? Okay. And so do they have on any liability if you don't get, if the, if the lien claimant doesn't get paid?
Speaker 2 00:16:41 Um, no.
Speaker 1 00:16:45 So they they're put on notice and they're going to try to convince the owner to pay it or take care of it. Okay. I mean, cause a lot of states don't have anything like that. So I think especially if you can get a lender involved, that's a lot of leverage, right?
Speaker 2 00:16:59 Yes.
Speaker 1 00:17:03 Yeah. I agree. And if some, some states have like a stop payment where if they receive the lender receives a notice, I can't issue any payments at all, but even just getting them informed. Cause like we have no rights like that here in Texas. I find that if I call a bank and it's a larger bank, they really don't care a smaller bank might. But if, you know, they're receiving a certified letter and obviously the terms of the note between the owner and the construction lender would put them in a technical default of the lien is filed, you know, so. Okay. Um, can you have a lien on leased space in Colorado? Okay. And so how does that lien look different if you file it or does it look the same?
Speaker 2 00:17:43 It's generally the same again.
Speaker 1 00:17:51 So is the owner liable on that or just the tenant?
Speaker 2 00:17:56 It
Speaker 1 00:17:56 Depends. Okay. No, I got the same thing here. I'm curious. What is it? What is it like in Colorado?
Speaker 2 00:18:01 Yeah, just, it just depends on the situation. Typically the construction
Speaker 1 00:18:21 Absolutely what I, what I kind of do because here in Texas is if the owner is paying for the improvements or giving a credit for the improvements, then we can have a lien, unfortunately, as a subcontractor material supplier, you don't get to see the lease. So my first one, we have an intent to lien that we have to send that person to request a copy of the lease. And it says, if you don't give it to me, then I'm just gonna assume that you're giving money and I'm gonna leave the whole thing. So anyways, and cause they never give you the lease. I never want to give you the least. So then I can say, Hey, I asked for it. You just didn't give it to me. All right. Public projects in Colorado. Um, you can't, can you file a lien on a public project in Colorado? So do they have, do they have bonds and what level do bonds start at?
Speaker 2 00:19:10 We the box. And so it just depends on the situation you for, for the county city school district, those types of contracts, it start to exceed $50,000, um, for projects with the state is going to exceed.
Speaker 1 00:19:29 Gotcha. And so the general contractors get those bonds and then how can a claimant get a copy of that bond?
Speaker 2 00:19:37 Uh, you just requested the bond statute. Why is the contractor file notice for post the notice at the site and also it wires, the contact group provided a copy of it.
Speaker 1 00:19:54 Is there a timeline on that? Okay. So, all right. Um, and then, so once you have a copy of the bond, you remained unpaid. When do you have to send your notices and who do you have to send them to, to have a bond claim?
Speaker 2 00:20:08 Yeah. It's time before final settlement. Plaintiff has to file a statement. I did not know when that happens. That is the way most of the, for me it's the contract is sufficient to satisfy the plate remains unsatisfied. It has nine days after the farm itself, it's really an accident.
Speaker 1 00:20:36 Gotcha. So you can actually, it's basically trap funds and a bond claim, which is kind of nice because the federal government doesn't require that. And in Texas we don't require that. So you have an, obviously it's a great leverage when you're holding up the GCs money, if you want to get paid. Awesome. Good deal. Okay. So that's public works super easy in Colorado man, but okay. So having dealt with subcontractors and all over the construction industry, I want to get, I'm trying to take a poll here, um, of everybody I've talked to about what do you think about the status of subcontracts? Like are they effective? Yes. I mean, no, I'm looking at it from the perspective of a subcontractor in being, do they really understand what they're signing? Do they know what they're supposed to do?
Speaker 2 00:21:33 Yeah. I a in you sign whatever, follow them and they don't really give a lot opps. You get back then what rights and in frankly, how lopsided projects are. And so I counsel my clients to come talk to me or better yet, let us develop our own contracts that kind of evens the playing field. But for the most part, that's just not in their DNA. This go ahead and sign things.
Speaker 1 00:22:17 No, I know. And it's so much a part of, I don't know if there's things there's a set of rules other than protect them and here's, you know, cause I'm dealing a lot with this now. And I think, you know, if you've never had an issue, I'm so happy for you, but if you do, it's going to hurt, right? Because those contracts put all kinds of teeth and dangerous things in there and you don't know it when you sign it. Right. And it's not until there there's a misstep that everything in that is used against you. And I think what has happened to us as attorneys took on the job of writing a subcontract from the perspective of the GC and trying to protect them, wholly thinking that there would be a negotiation and they're just, and there just never was. And now we have these one-sided documents that I'm, I mean, I don't know about you, but they've gotten worse over the years.
Speaker 2 00:23:05 No, they're terrible at having, having dissolves, add GCs, prevented the density and so forth and so on. And I also can just let's look at the scope of work. That is the most important thing, because that's the whole point of the project because the GC can just make up words. But if you don't specify that you really got a disservice because it's easy to say, well, X any changes there should be a cheater.
Speaker 1 00:23:48 Absolutely. Absolutely. And the other thing that I, I come across is that subs always think that they're hard to do their bid and that normally doesn't even become part of the contract. And so we're getting in dangerous situations there. Uh, so I'm just kind of taking everybody's temperature on the, on the subcontract, because I really think that we can do a better job even let me wrong. I think there's two issues with the subcontract right now is that number one, nobody can understand them. I mean, even lawyers, it takes us fricking a week to understand what you're trying to say, and it doesn't have to be that way. And number two is that it puts a hundred percent of the risk and liability on the subs, which I'm not saying they shouldn't have some, but it should be, we should split it. Right. And so even if we could deal with one of those things and just put it in a way that if a subcontractor wanted to know what it was agreeing to, he could read it by himself. You know, I think that would be helpful
Speaker 2 00:24:40 Without is what they're looking for. And this is unfortunately one time where they only understand what it is. And I have to say, when we look at first, uh,
Speaker 1 00:25:25 Yeah, even if you don't negotiate anything, just figure out what it says, right? So you know what you're agreeing to. So if you know what you're agreeing to, then you can evaluate the risk. And like I said, I know that you're busy. We're here to help you guys do this because we really want you to run successful businesses at the end of the day. That's what it's all about. And there's just so much danger in there. So anyways, that's my soap box. Uh, that's the, you know, I wrote a book, quit getting screwed, which is all about the dangerous terms and subcontracts put in plain English. So whoever I'm sure it's most of the stuff that you face on a daily basis that are in the subcontract that I've seen by my clients over and over again, there's 20 different chapters and all the things I've just seen happen. So anyways, but thank you so much, Michael, for being here. And like I said, we'll put your contact information and all the things in the show notes. And if anybody wants to reach out to you directly, I appreciate it. I appreciate that. While filing a lien is so easy in Colorado. Nice. And you have lots of ways to create leverage, to get paid fast. So, but thanks again for being here. It's not much, Michael, have a great day.
Speaker 1 00:26:33 Thank you for listening to this episode of put, getting screwed. I hope you found it helpful if you like what you hear, please like us and follow our podcast. If you want further information. So you can find us subcontractor institute.com. We're also on Facebook, LinkedIn and Instagram, and the book is available on Amazon tune in two weeks from now for a new episode. Thank you.
