Mechanics lien claim limited to contract price

Posted by: Nov 19, 2016By Brian Stutheit

This article discusses what amount a mechanics lien claimant may foreclose.

When a contractor and owner have an agreed contract price, the contractor may not lien the property for more than the contract price by claiming that the value of the work was more than the contract provided. Byerly v. Bank of Colorado. 

Unless the contract provides for a different amount, the mechanics lien bears interest at the rate of 12% simple interest. It is possible to obtain an award of court costs when foreclosing a lien. A contractor or materials supplier with a lien will not be entitled to claim attorney fees, unless the claim is made under the Mechanic’s Lien Trust Fund statute.  The statute requires that when general contractors are paid for the work of subcontractors or for the materials supplied by others, the general contractor is required to hold the money “in trust” for the subcontractor or supplier. Any failure to pay money that is owed to the subcontractor or supplier under this “trust” requirement will create potential liability to the subcontractor or supplier on the part of the general contractor for up to triple damages and attorney’s fees for intentional non-payment to the subcontractor or supplier. It is also possible for a contractor to make a property owner responsible under the trust fund statute if the owner receives money from insurance for property repairs, and does not turn the money over to the contractor.  This can only be accomplished if the contractor has a well written contract.

Even though the mechanics lien statute does not allow a lien holder to add attorney fees to the lien amount, the contractor or provider may sue for attorney fees, if the contract provides for recovery of fees.  He or she just cannot include attorney fees in the amount asked for in a mechanics lien foreclosure lawsuit.