When it comes to construction projects, ensuring proper payment is a top priority. In Colorado, like many other states, lien rights provide a legal avenue for contractors, subcontractors, and suppliers to secure payment for work performed on a property. However, Colorado has a unique wrinkle in its lien laws—it's an optional preliminary notice state. This means that while sending a preliminary notice isn't required, it can have significant implications for how much you can recover through a lien.

If you're working on a project in Colorado, it's crucial to understand the consequences of not sending a preliminary notice, especially if you plan to file a lien later. Here's what you need to know about Colorado lien laws and how sending or not sending a preliminary notice can affect your ability to collect payment.

In simple terms, a preliminary notice is a document that informs the property owner, general contractor (GC), and other interested parties that you are providing labor or materials for a construction project. It establishes your legal right to file a lien if payment isn't made, should it come to that.

In simple terms, a preliminary notice is a document that informs the property owner, general contractor (GC), and other interested parties that you are providing labor or materials for a construction project. It establishes your legal right to file a lien if payment isn't made, should it come to that.

While Colorado doesn't mandate sending a preliminary notice, not doing so can significantly limit your ability to collect payment if a lien is necessary. Here's why:

• The Lien Can Only Cover the Amount the GC is Owed: If you do not send a preliminary notice but file a lien on the property, the amount you can recover is limited to the amount that the general contractor (GC) is owed at the time of the lien filing. This means you cannot claim more than what the GC has been paid for the project.
For example, let's say you're a subcontractor who provided work on a project. If you don't send a preliminary notice and decide to file a lien later, your lien can only cover what the GC has been paid for your portion of the work—not the total value of your contract or any unpaid balance. This can severely limit the amount you can collect.
• Lack of Priority in Payment: Sending a preliminary notice can give your claim priority in the payment queue, as it alerts the owner and GC to your financial interest in the property. Without this notice, you risk being placed at the bottom of the list when payment is distributed, especially if there are competing lien claims.
• Potential Payment Delays: Without a preliminary notice, you may face delays when trying to collect payments. The GC and property owner may not be aware that you have a claim, and the process to resolve any payment disputes may take longer.

While Colorado doesn't require you to send a preliminary notice, doing so can greatly improve your chances of recovering what you're owed. Here's why:

1. Secures Full Payment:

By sending a preliminary notice, you preserve your right to lien the full amount owed, not just the amount the GC has already been paid. This can make a huge difference if there are payment disputes later on.

2. Increases Leverage:

A preliminary notice acts as a formal reminder to the property owner and GC that you have a financial stake in the project. It can encourage them to prioritize payment and resolve any issues before a lien is filed.

3. Reduces Risk:

A preliminary notice helps ensure that your lien rights are secure if a payment issue arises. Without it, you risk losing out on the full amount owed to you due to restrictions on what you can recover.

4. Minimizes Legal Complications:

Filing a lien in Colorado requires strict adherence to deadlines and legal processes. A preliminary notice helps you stay on the right track by ensuring you've taken the necessary steps to secure your payment rights. It also gives the GC and property owner an early heads‐up, which could help avoid unnecessary disputes down the line.

• Know the Law: Colorado's lien laws allow you to file a lien even without a preliminary notice, but your ability to collect could be limited to the GC's payment at the time of the lien.
• Send a Preliminary Notice: While it's not mandatory, sending a preliminary notice is a smart business practice to ensure you can collect the full amount owed to you, rather than being restricted to the amount the GC has been paid.
• Act Quickly: Be aware of the deadlines for filing liens and sending preliminary notices. In Colorado, you must send a preliminary notice within 10 days of starting work or supplying materials to ensure your lien rights are preserved.
  Consult a Professional:If you're unsure about how to navigate Colorado's lien laws, it's always a good idea to consult with a professional like Nationwide Construction Notice. We can help you understand the specifics of your project, ensure compliance with all deadlines, and guide you through the process of sending notices and filing liens.

Understanding and leveraging preliminary notices in Colorado is an essential part of protecting your lien rights and ensuring you get paid for your work. While it's not required, sending a preliminary notice can significantly increase the amount you can recover if you need to file a lien, protecting your business from financial uncertainty.

If you're working in Colorado, don't leave your payment protection to chance. Contact Nationwide Construction Notice today to learn more about how our lien notice services can help you secure your payments and protect your financial interests on every job.