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Do you have to pay off debts to remove a lien?

| May 10, 2021 | Real Estate |

Property owners and developers will sometimes encounter a lien if they do not pay a bill. This can be because they disagree over the amount owed or the quality of the work. It can lead a contractor or subcontractor to place a lien on the property, which is typically known as a construction lien, contractor’s lien or mechanic’s lien. When the lien is valid, the owner cannot sell the property without paying the lien. Paying the money or negotiating an amount to remove the lien is generally the most straightforward approach to addressing the lien.

The claimant who placed the lien then issues a Release of Lien form, enabling the owner to sell the property if they wish. The claimant has ten days to file an acknowledgment of satisfaction with the same county recorder office (in the same county as the property) where they filed the lien.

Are there other options?

Property owners may be strapped for cash to pay the lien, which is why they may need to sell the property. However, they cannot sell the property when there is a lien. This is a classic example of a Catch-22, but there may be other solutions to paying the lien first.

  • Paying more: Those who have a working relationship with the creditor may be able to get a lien release before paying if the property owner promises to pay more using proceeds from the land sale.
  • Lien expires: Colorado liens last six months and then must be renewed. Sometimes the creditor does not renew the lien.
  • Did not make the deadline: Those who send a Notice of Intent to Lien must get the lien within two to six months (depending upon the services rendered) of last providing services.

Negotiating a solution

Depending upon the size of the lien and what is at stake, it may make sense to contact an attorney who handles real estate law matters here in Colorado. They can help determine if the lien is valid and the best option (based on the specific details of the issue) for resolving it.