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Commentary: Know the Details of Mechanics Lien Descriptions

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For those who prepare their own mechanic’s liens or those who have unwanted mechanic’s liens filed against their projects or their properties, here’s a hint:  A June 4, 2012, Colorado Supreme Court case may make a difference. That case, in responding to a question submitted by the bankruptcy court, answered that a deed of trust (mortgage) that described the property only by its address would not be adequate.

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In that case, the deed of trust referred to a legal description that was an attached exhibit, but it was recorded in the office of the county clerk and recorder as required—without the attached legal description. According to the court’s response, the deed of trust was practically ineffective as a lien.

How does that affect mechanic’s liens? That’s not certain because those liens must be recorded and describe the property the lien is being asserted against. One of the Colorado statutes the Supreme Court relied on did exclude mechanic’s liens, and Colorado case law ruled that a description in a mechanic’s lien is sufficient if it distinguishes the property against which the lien is claimed from all other properties.

The Colorado mechanic’s lien case law provides that an address may be sufficient. For instance, 375 Elm St., Denver, Colorado, should distinguish that property from all others. Interestingly, a 1923 Colorado Supreme Court decision upheld the validity of a mechanic’s lien that described the property only as “Lots 33, 34, 35 and 36, Block 10, Windsor Addition”—with no city, county or state identified.

However, the recent Colorado Supreme Court decision may be interpreted otherwise. To be safe in preparing a mechanic’s lien statement, or if your company is defending against a mechanic’s lien, it would be best to make sure that the lien statement has a sufficient legal description. The way to get that description is from the assessor’s office in the county in which the property is located or from a title insurance company. Getting it right—and complete—will save time, effort and possible risk.

The recent Supreme Court decision is not without its critics. One of the justices of the court filed a somewhat stinging dissent in which he said the court’s majority opinion to “. . . be unjustified by its [the statute upon which the court relied] specific language, our prior decisions, the interpretative directive of the legislature, or the policy evidenced by the statutory scheme as a whole.”  He “took comfort” in the fact that the opinion only advised the bankruptcy court and was not a binding precedent.

Albert B. Wolf is a principal in the Denver law firm of Wolf Slatkin & Madison PC.

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