“Where Is Our House?” The Saga Continues: Home Builder Entitled to Foreclosure Decree

Mechanic’s Lien not “Excessive”

This is the second installment regarding a seven year saga which began in 2018. See “Where Is Our House? Wrongfully Terminated Home Builder Awarded Damages in Arbitration.” 

In January 2018, a home builder contracted to construct a custom home for a couple. Disputes arose between the home builder and its customers and, in December 2018, the customers terminated the contract because of the home builder’s claimed defaults. The home builder recorded a mechanic’s lien against the project for the unpaid amounts it was owed and pursued arbitration under the contract.

In 2021, an arbitration award was entered for the home builder based on its customers’ wrongful termination of the construction contract. After the award was confirmed by the trial court and judgment entered in January 2022, the customers appealed. They claimed the award was improper for numerous reasons and that the judgment must be vacated. In its May 2023 decision, the Court of Appeals rejected the customers’ arguments and affirmed the judgment. The Supreme Court denied the customers’ request for certiorari.

Rather than accepting the result of the arbitration and satisfying the judgment, the customers forced the home builder to foreclose on its mechanic’s lien claim which had been stayed pending arbitration. At trial, the customers claimed the home builder’s mechanic’s lien was excessive and void. A mechanic’s lien is excessive under C.R.S. § 38-22-128 if the lien claimant knowingly files the lien for an amount greater than could reasonably be owed. If a mechanic’s lien is excessive, the lien claimant forfeits all rights to the lien. The customers also argued that any amendments to a mechanic’s lien made after the 4-month statutory deadline are invalid, even amendments reducing the principal amount claimed. The customers claimed that an amendment to reduce the lien amount after the 4-month period in C.R.S. § 38-22-109(6) had expired was conclusive evidence that the home builder’s original lien was excessive. Their arguments were rejected by the court and a foreclosure decree was entered.

Undeterred by their repeated losses, the customers appealed the foreclosure decree. In a published decision issued in January 2025, the foreclosure judgment was affirmed and the case remanded to the trial court to determine the home builder’s attorney’s fees and costs incurred on appeal. In a case of first impression, the Court of Appeals rejected the customers’ argument that the home builder’s mechanic’s lien was void because the home builder reduced the principal amount of its lien after the 4-month period in C.R.S. § 38-22-109(6) had expired.

The Court of Appeals concluded this argument was “illogical,” and held that mechanic’s liens can be amended to reduce the amount claimed at any time based on subsequent events or information that was unavailable to the lien claimant when the lien was originally filed. The home builder’s lien amendments had been recorded when the home builder learned the customers had made direct payments to several of its suppliers after the original lien had been filed. As such, the amendments were not invalid or untimely. Likewise, the home builder’s lien was not excessive. The fact the lien included amounts for materials for which payment had not already been made by the home builder did not make the lien excessive.

After seven years, during which an arbitration, a trial, and two appeals have taken place, a tenacious home builder has prevailed and is entitled to enforce the foreclosure decree.