Construction Law in Colorado

Court of Appeals Recognizes Limitations to Relation-Back Doctrine

Before a potential developer purchases property for a new project, it needs to secure financing.  Before the lender will agree to finance the project, it wants to be satisfied that the project has or will be granted the requisite entitlements.  And before the requisite entitlements can be obtained, preliminary design work must be performed.  As a result, design professionals often perform site planning and other design work before the developer even purchases the real property.  A somewhat-similar scenario happened in Oz Architecture of Denver, Inc. v. V3 Companies of Colorado, Ltd. (Colo. App. April 19, 2012) (not published pursuant to C.A.R. 35(f)).

Court of Appeals defines the scope of the relation-back doctrine in light of intervening conveyances

In Ferguson Enterprises, Inc. v. Keybuild Solutions, Inc. et al., (Colo. App. Dec. 22, 2011), the Court of Appeals had to address the priorities when mechanics' liens and multiple deed-of-trust foreclosures collide.  While reaffirming and compiling several previously-established propositions of law in this area, the Court also addressed some novel issues.

Including accrued interest in lien statement does not render it void as excessive

In Honnen Equipment Company, Inc. v. Never Summer Backhoe Service, Inc. (Colo. App. July 7, 2011), a division of the Colorado Court of Appeals held that the inclusion of interest in a lien statement does not render the lien void as an excessive lien.  In doing so, the Court had to distinguish prior Supreme Court precedent holding that a mechanics' lien may not include late charges.

Arbitrator decides amount of lien while court decides its procedural validity

In Sure-Shock Electric v. Diamond Lofts Venture (Colo. App. June 23, 2011), a division of the Court of Appeals held that, on confirmation of an arbitration award, the district court retains jurisdiction to decide the procedural validity of a mechanic's lien even after the arbitration award confirms the claimant's right to a lien under the mechanic's lien statute.

Governor signs bill remedying lis pendens problem with Weize Company, LLC v. Martz Supply Co.

Earlier this month, the Governor signed into law Senate Bill 11-264.  The purpose of SB 11-264 is to abrogate the part of Weize Company, LLC v. Martz Supply Co. holding that a lis pendens must be recorded in a claim against a lien substitution bond.  The new law amends various sections of Colorado's mechanics' lien statute to clarify that a lis pendens or a notice of commencement of action shall not be recorded in cases where a mechanics' lien has been properly bonded over.  The new law takes effect July 1, 2011.