Sending a preliminary notice to Colorado is a valuable strategy to ensure timely payments on construction projects. This notice serves as an informational document, usually sent to the property owner at the start of the project.
Whether you’re issuing Colorado pre-lien notices or receiving them, it’s crucial to understand the process thoroughly. For senders, accuracy is key to compliance. For recipients, recognizing the notice and knowing how to respond effectively is just as important. However, navigating the various rules and obligations tied to preliminary notices can be challenging. These complexities are often influenced by factors like the type of project or your role in it, which can introduce additional requirements and variations.
To simplify this process, here’s a breakdown of the essential rules and guidelines for sending a Colorado preliminary notice.
Key Takeaways
- Preliminary Notice Is Optional but Beneficial: While not required in Colorado, sending a preliminary notice can help secure payment rights by prompting property owners to withhold funds from the prime contractor.
- Timeliness Matters: Although there’s no penalty for sending a preliminary notice late, it’s most effective when submitted early, particularly for undisbursed funds.
- Accurate Information is Crucial: Whether you’re sending or receiving a preliminary notice, accuracy in the details is vital to avoid delays in payment and ensure compliance with Colorado’s requirements.
Who Needs to Send a Colorado Preliminary Notice?
In Colorado, a Notice to Owner is not mandatory to preserve mechanics lien rights. However, submitting this notice prompts the property owner to withhold the claimed amount from the payment to the prime contractor. This notice can be utilized by any party with lien rights who does not have a direct contract with the property owner.
It’s important to note that the only notice specifically required to enforce a mechanics lien in Colorado is the Notice of Intent to Lien.
When Do I Need to Send a Colorado Preliminary Notice?
The Notice to Owner can be provided to the property owner at any point, either before starting the work or after completing the work but before issuing the Notice of Intent to Lien.
Who Do I Need to Send the Colorado Preliminary Notice To?
The Notice to Owner should be delivered to the property owner, reputed owner, superintendent of construction, agent, architect, financial institution, or any individual responsible for distributing construction funds.
What Information Is Required on a Colorado Preliminary Notice?
A Colorado Notice to Owner must include the following details:
- Information about the claimant
- Details about the hiring party
- A declaration that the claimant has provided or will provide labor and/or materials to the prime contractor or someone authorized by the owner
- A description of the labor and/or materials supplied
- The estimated or agreed value of the labor and/or materials
Note: Minor errors in the notice will not render it invalid as long as it adequately informs the owner or reputed owner of the key points required or prompts them to investigate further.
How Should the Colorado Preliminary Notice Be Sent?
A Notice to Owner can be served through personal delivery or by leaving it at the residence or workplace of the owner, superintendent of construction, agent, architect, or financial institution, ensuring it is handed to someone in charge at the location.
Is the Colorado Preliminary Notice Considered Served When Sent or When Received?
The Notice to Owner Colorado is deemed served once it is received by the intended recipient or handed to the appropriate “person in charge” at the designated location.
What If I Send the Colorado Preliminary Notice Late?
In Colorado, a Notice to Owner is optional, meaning there is no penalty for sending it late if you choose to send it. However, it’s generally more effective to send the notice as early as possible, as it only pertains to “undisbursed funds.”
Do I Need to Send a Colorado Preliminary Notice?
No, Colorado does not mandate a preliminary notice to maintain a claimant’s right to file a bond claim. However, any party has the option to provide a preliminary notice if they choose to do so.
About Colorado Preliminary Notices
In Colorado, there is no legal requirement to send a preliminary notice before or immediately after starting work or providing materials on a project. However, the state does recommend sending a best-practice preliminary notice to protect payment rights. If payment issues escalate and a lien becomes necessary, a Notice of Intent to Lien must be provided to the property owner.
While not mandatory, any party other than the prime contractor can file a Notice to Owner in Colorado. This notice carries significant weight. Once delivered, the property owner is obligated to withhold sufficient funds from the principal contractor or any other person involved to satisfy any potential claims or liens. This means that if a subcontractor or other participant issues a preliminary notice before starting their work, the property owner must withhold the amount specified in the notice to cover any possible claims.
Additionally, project participants have the option to file a Disburser Notice under CO Rev Stat § 38-22-126, which allows them to bypass the usual payment chain. If the notice is properly filed, the disburser of funds (typically the construction lender or property owner) must pay the claimant directly. If the disburser fails to do so, they are liable for any damages the claimant incurs. For example, if a subcontractor issues the notice and the general contractor fails to pay, the disburser is responsible for ensuring payment from the project funds.
Finally, if a payment dispute leads to the need for a mechanics lien, the claimant must provide the property owner, reputed owner, or their agent with a Notice of Intent to Lien along with a copy of the Statement of Lien at least 10 full days before filing the lien.
How to Send a Preliminary Notice in Colorado?
Step 1: Download a Free Notice Template
Get the preliminary notice form for free.
This standard notice form can be used in Colorado or any other state where sending a notice isn’t mandatory. It provides essential details about your company to the property owner, general contractor, and others responsible for payment on the project.
Step 2: Complete the Form
Take care to fill it out accurately.
Once you’ve downloaded the form, ensure you complete it thoroughly and correctly. The general contractor and property owner rely on this information to process payments, and any errors could lead to delays in receiving your payment.
Step 3: Submit the Form
Deliver the notice however you prefer.
Colorado has no strict rules on how the notice should be delivered. You have the flexibility to send it using any method you choose.
Get in Touch
Sending a preliminary notice Colorado is a proactive approach to ensuring payment security on construction projects. Although not mandatory, it plays a crucial role in protecting payment rights and ensuring the property owner withholds the necessary funds.
By understanding when, how, and to whom the notice should be sent, you can better navigate the complexities of the process. Whether you’re issuing or receiving a preliminary notice, paying attention to the details and complying with the guidelines is essential for smooth project execution and avoiding payment disputes.
At CRM Lien Services, we have been serving customers across the country with required reference documentation for lien claims since 1986. We provide expert guidance, helping contractors and suppliers safeguard their payment rights through seamless and timely preliminary notice and lien filings.
We have a wealth of expertise, are licensed and insured, and have a team of highly knowledgeable document processors. If you’re looking for a straightforward process for filing a preliminary notice and mechanics lien, give us a call or shoot us an email.
