Mechanics Lien trust Fund
A Mechanics Trust Fund Lien is a legal instrument that offers protection for subcontractors to pursue money that is owed to them after completing their part of a larger construction project by placing a lien against the property. One of the more complicated instruments/protections in real estate law, these liens confuse and scare many homeowners or developers that find themselves on the wrong end of these liens.
removing the lien against your property for something your contractor did wrong
General Contractors are required by Colorado law to hold all of the funds received in financing a project in a trust. This trust is designed to ensure that laborers, material men, and any other subcontractor that is offering improvements to the real estate of the principal will get paid for a job well done.
In most liens, the homeowner has failed to pay the person that did work to help develop their property. With Mechanics Trust Fund Liens, the homeowner may have done everything right and still be facing this lien on their property. Why? Typically, the homeowner has paid their general contractor, but the general contractor has not paid the subcontractors. If you find yourself in this situation, don’t panic, there are options that you can pursue. A consultation with an experienced real estate attorney, like GLO, can help show you the light at the end of the tunnel.
Colorado law places many requirements on general contractors when they are paid in advance for work involving laborers, material men, or other subcontractors. If the general contractor fails to comply with these requirements, then the principal owner of the property can pursue various remedies and attempt to have the lien removed from their property. Various remedies for property owners can come through various civil claims, like civil theft or conversion of property, which can lead to the owner receiving treble damages (money won in a lawsuit) or even criminal charges against the contractor in extreme cases.
If you’re facing a Mechanic’s Trust Fund Lien, then you should consult an experienced real estate attorney, like GLO, to find out what the best steps forward will be.
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