Legal Eagles-Expired Mechanics Liens

[mcsquared]

Having trouble getting a straight answer from the Googles on this. I have a property that I am under contact to sell. There are two mechanics liens on the property which are about 18 months old. They never sued or tried to foreclose the lien. And as far as I can tell they have expired. Do I need to do anything to discharge the lien or will the title company just ignore them because they are expired? Colorado if it matters.

[smitchell333]

Not an attorney but RE Broker in CO.

Technically it's 13 months by law but each Title Co and lender have their own policies meaning that unless the lein is really old (several years maybe) many will require you to take care of the lein.

In other words either take care of them or be prepared to have it queer the deal or shop it around to different title cos and lender.

[mcsquared]

Not an attorney but RE Broker in CO.

Technically it's 13 months by law but each Title Co and lender have their own policies meaning that unless the lein is really old (several years maybe) many will require you to take care of the lein.

In other words either take care of them or be prepared to have it queer the deal or shop it around to different title cos and lender.

Thanks. They were filed in October 2013 so they are beyond the 13 month time frame. How do I take care of it? Hire an attorney? Or is there a legal form I can file which says "This is expired"? Also, there is no lender involved. Cash deal.

[irul&ublo]

In Cal, there is a specific code section which addresses expired liens, they are by law no longer of effect or "notice". I'd be surprised if there is not something similar in Co. I'd call the title company and ask what their procedure is. They run into this kind of stuff all the time.

[smitchell333]

Thanks. They were filed in October 2013 so they are beyond the 13 month time frame. How do I take care of it? Hire an attorney? Or is there a legal form I can file which says "This is expired"? Also, there is no lender involved. Cash deal.

I'd start by asking the Title company that you've chosen what their policy is. If they don't have a policy requiring release and the buyer is OK then you may be able to close as is.

If you need to clear them then probably an attorney will be needed but maybe the title co can help you with release of liens. My advice to a client would always be to at least consult an attorney in such a situation because you're getting into litigation scenarios that are probably theoretical but good to understand.

What type of property is this?

[Foggy_Goggles]

As a contractor and purchaser of distressed real estate, I'll agree with the above. Basically, it is up to the title insured and buyer and how they feel. They are exceptions to clean title. You wanting to sell the property is exactly what the lien holder wants. My advice is to talk to your real estate attorney. Depending on the amount of the liens, it may be prudent to settle. Be full disclosure with the buyer because they'll find out.

[GeezerSteve]

Disclaimer: I am licensed in WA, not CO. The following is merely my perspective based on very limited information. It is NOT legal advise so do NOT rely on it. Get an attorney.

There are two mechanics liens on the property which are about 18 months old.

When was the work completed?

In most states, a mechanics/materialmans lien must be foreclosed upon within a certain time after the latter of lien is filed or the work is completed. (Some states require that the lien be affirmatively extended periodically during the work.) If the the lien is not timely foreclosed upon, it becomes stale and invalid. Note, however, that after the lien becomes invalid the underlying claim for unpaid work or materials may still exist, although it will not be secured by the statutory lien.

If the lien is indeed unvalid but remains on the property, an owner can demand that it be removed. If the presence of an invalid lien prevents a sale of the property that would have otherwise gone through, the owner/seller may have a claim for slander of title against the one asserting the (now) invalid lien.

If the owner has already settled up with the contractor/supplier, it's a no-brainer: Demand that the lien be removed ASAP.

If the owner has shorted (or there is a dispute re the amount owed to) the contractor/supplier, but the latter allowed the lien to become invalid by failing to foreclose, then the demand to remove the invalid lien might wake up the claimant to go after the (now) unsecured claim. But that is usually not a reason to forebear from demanding that the invalid lien be removed; if a contractor/supplier asserts a lien, it is required to play by the rules. (As a practical matter, the presence of a couple liens, even if invalid, might make the owner/seller look like a deadbeat and/or sleazeball.)

Disclaimer: I am licensed in WA, not CO. The following is merely my perspective based on very limited information. It is NOT legal advise so do NOT rely on it. Get an attorney.

[mcsquared]

I'd start by asking the Title company that you've chosen what their policy is. If they don't have a policy requiring release and the buyer is OK then you may be able to close as is.

If you need to clear them then probably an attorney will be needed but maybe the title co can help you with release of liens. My advice to a client would always be to at least consult an attorney in such a situation because you're getting into litigation scenarios that are probably theoretical but good to understand.

What type of property is this?

It is an industrial condo in a complex with 10 other units. The Property Owners Association hired a roofing contractor to replace the roof on the entire property. Something went sideways at the very end of the project and the POA is refusing to pay the last installment. So the roofing contractor and one of the suppliers liened every unit for the balance ($110k). And that was the last i heard about it. Although I think there is probably a lawsuit pending against the POA. I think they probably have a claim against the POA (the majority owners are douchenozzles.) I tried to get them to settle a long time ago but they decided to fuck the roofing company because they can.

Any recommendations for a Real Estate attorney?

[irul&ublo]

It is an industrial condo in a complex with 10 other units. The Property Owners Association hired a roofing contractor to replace the roof on the entire property. Something went sideways at the very end of the project and the POA is refusing to pay the last installment. So the roofing contractor and one of the suppliers liened every unit for the balance ($110k). And that was the last i heard about it. Although I think there is probably a lawsuit pending against the POA. I think they probably have a claim against the POA (the majority owners are douchenozzles.) I tried to get them to settle a long time ago but they decided to fuck the roofing company because they can.

Any recommendations for a Real Estate attorney?

Before you spend dinero on a lawyer, why don't you find out from the POA what the status of the dispute is. It may have been resolved or some agreement reached regarding the liens.

[TNKen]

In TN and VA, there is a procedure to make a demand to remove an expired lien. If the contrctor/supplier/sub doesn't, and suit has to be filed to quiet title, they become responsible for the costs to quiet the title.

If suit was filed to enforce the lien, then it remains in place unless it is removed by payment or a bond.

Again, I'm not a CO licensed dentist, only VA and TN. Your mileage may vary after you consult with appropriate CO counsel.

[Foggy_Goggles]

And HOA's wonder why I stipulate that 100% of the materials are paid before they are ordered, 50% of the labor is due up front and the remainder is due every 2 weeks within 48hrs. of invoice. Where is that $110K? In the POA checking account or has it gone elsewhere. What it collected through an assessment or regular dues? If there is a pending lawsuit, the buyer will want to know about that as well. Coloraod COIA accounting rules are very squirrelly. Yeh, you need a good real estate attorney and his first phone call needs to be to the POA president/management company.

[MakersTeleMark]

Any recommendations for a Real Estate attorney?

Sent you a PM.

[mcsquared]

Before you spend dinero on a lawyer, why don't you find out from the POA what the status of the dispute is. It may have been resolved or some agreement reached regarding the liens.

I have. Kind of. Nobody can really tell me what is going on. But I think there is a mediation hearing or something in July. Meanwhile I am trying to sell with a 110K in liens. I have disclosed all this to my buyer (and they are ok with it) but I am just trying figure out what I need to do to be able to close with the old liens and let them hash everything out with the POA.

[Danno]

Any recommendations for a Real Estate attorney?

This guy
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v

Sent you a PM.

[GeezerSteve]

Although I think there is probably a lawsuit pending against the POA. I think they probably have a claim against the POA (the majority owners are douchenozzles.)

So, it's possible that the contractor and supplier did timely commence a foreclosure action? If so, the statement in your OP that the liens "have expired" would be incorrect.

Although the POA is the party in contractual privity with the contractor, the lien rights are against the property.

There are several workarounds to this. Your share of the potential POA liability is some fraction of the lien claim, and it's possible that can be covered by a portion of the purchase price being held somewhere. Or maybe the POA will agree to indemnify the buyer. Etc., etc. So, yeah, get an RE attorney.

Nobody can really tell me what is going on. But I think there is a mediation hearing or something in July.

The POA has an obligation to keep you informed. Make sure to get a copy of the condo declaration, articles and bylaws to your attorney.

[smitchell333]

Yeah getting more complicated with the OA, possible law suit, etc. At a minimum you'll need the buyer to acknowledge all this in writing if not have it all resolved prior to closing. If I was representing the buyer I would advise serious caution.

Attorneyville to make sure to properly CYA

If you still need a RE attny referral PM me and I'll stir one up.