Maria Conversa | Snell & Wilmer
Starting August 12, 2026, Colorado’s mechanics’ lien statute underwent its most significant update in years. Colorado’s General Assembly enacted Senate Bill 26-074 on April 6, 2026, and the new law directly addressed a problem that has plagued contractors and subcontractors for decades. For years, a contractor and subcontractor who filed a lien for the full amount it believed was due — particularly when that amount included disputed costs, delay damages, or lost productivity — risked triggering the “excessive lien” penalty. That penalty could force the claimant to forfeit its lien rights entirely and pay the other side’s attorney fees. The new law expands the categories of costs to be claimed by good-faith lien claimants, while still protecting against truly abusive filings. General contractors, subcontractors, suppliers, owners, and lenders all need to understand these changes.
What the Bill Changed
1. Lien Value May Include Disputed Amounts
The bill amends the core lien statute to insert the phrase “whether disputed or undisputed” into the description of lienable value. Prior law referenced only “the value” of labor, services, or materials furnished. The new text confirms that a lien can attach for amounts the parties still dispute. A claimant no longer needs the owner or general contractor to agree on the amount before filing.
2. Delay, Lost Productivity, and Disruption Costs Are Lienable
A new subsection expressly states that “nothing in this article prohibits the inclusion of costs otherwise allowed under a contract in a lien, including costs incurred as a result of delay, lost productivity, or other disruption to the work.” This provision directly expands what “value” means for lien purposes, and it overturns a longstanding judicial limitation, discussed below.
3. Good Faith Safe Harbor Against the Excessive Lien Penalty
Colorado law has long penalized excessive lien claims, and that penalty remains. Under the existing rule, a claimant forfeits all lien rights and must pay the other side’s costs and attorney fees if it files a lien for more than is actually due, without a reasonable possibility that the claimed amount was due, and with knowledge that the amount exceeds what is owed. Colorado courts have read this test to require both that mismatch and an intent to defraud, judging excessiveness based on what the claimant knew at the time of filing. This approach reflects the statute’s original purpose: to punish fraudulent claims, not good-faith disputes. The bill now adds an explicit statutory safe harbor. If a court ultimately awards less than the lien claimed, that fact alone does not make the lien “excessive,” so long as the claimant had a good-faith basis to believe the full amount was due when it filed. The bill also clarifies that an amount is “due” if the claimant reasonably and in good faith believes it represents the value of what it furnished, even if the amount remains unliquidated or disputed. This matters because a court must award all attorney fees, not just a portion to a party that successfully defends against an excessive lien claim. The safe harbor therefore meaningfully reduces a claimant’s financial exposure when filing an assertive good-faith lien.
4. Parallel Changes for Public Works Claims
The bill makes identical changes to the public works bond claim statutes. A supplier’s verified statement of claim on a public project may now state amounts, “whether disputed or undisputed,” and may include delay and disruption costs that the contract allows. This change responds to a 2026 Colorado decision holding that purely consequential delay and disruption damages — such as lost profits or idle time costs — fell outside what a public works verified statement of claim could include, because the statute required claimed amounts to relate to costs incurred in performing the project’s work. The same good faith safe harbor applies to the excessive claim penalty on public projects. The law now treats private mechanics’ liens and public payment bond claims more consistently.
How This Departs from Prior Case Law
Colorado courts have long strictly construed the mechanics’ lien statute when deciding whether a lien right exists, but liberally construed the statute once a claimant establishes a valid right, to prevent unjust enrichment of property owners. Within that framework, several judicial decisions created uncertainty about what a lien could include:
Courts historically excluded delay and idleness damages. In an 1886 case,1 the Colorado Supreme Court held that a subcontractor could lien for extra labor caused by construction mistakes (treating those costs as part of the “cost of construction”), but could not lien for “damages and expenses incurred through enforced idleness” or delay caused by another party’s default. Those amounts were breach of contract damages, not “value” the claimant furnished to the property. S.B. 26-074 overrules this limitation by expressly authorizing lien claims that include delay, lost productivity, and disruption costs — so long as the contract allows recovery of those costs.
Courts excluded consequential delay damages on public projects too. A 2026 Colorado decision2 held that a public works supplier’s verified statement of claim could not include purely consequential damages for delay or disruption — such as lost profits or idle-time costs — because the statute limited claims to costs incurred in performing the project’s work. S.B. 26-074 directly supersedes that holding by expressly authorizing delay, lost productivity, and disruption costs in public works statements of claim, so long as the underlying contract allows recovery of those costs.
Courts excluded contractual charges, like late fees, too. In 1990, the Colorado Supreme Court held that contractual late charges are not lienable because they do not represent the “value” of labor, services, or materials furnished.3 A 2011 appellate decision4 similarly held that interest “does not represent the value of the work performed.” The new bill does not directly address late charges or interest, but by authorizing liens for “costs otherwise allowed under a contract,” including disruption costs, it significantly broadens the categories of contract-based amounts that a lien can include. This change pushes back against the restrictive trend those earlier decisions established.
Courts had already begun softening the “excessive lien” threat. A 2011 appellate decision5 held that including contractual interest in a lien statement– even though interest was not lienable– did not automatically render the lien void as “excessive.” A 2025 decision6 likewise upheld a lien that included costs due but not yet paid, reasoning that the statute’s future-tense language contemplated such claims. S.B. 26-074 codifies and extends this trend toward flexibility. It creates an explicit statutory safe harbor rather than leaving claimants to argue good faith on a case-by-case basis.
The “reasonable value” ceiling remains intact. Courts consistently hold that a lien may reach only the reasonable value of materials, labor, and services actually furnished,7 and that work so defective it must be entirely redone has no value to the owner.8 Nothing in S.B. 26-074 changes these principles. A claimant still must furnish something of value to the property. The bill expands what costs count toward that value, but does not eliminate the requirement that value exist.
Practical Consequences for Construction Projects
Lien Rights and Perfection
The bill does not change the mechanics of perfecting a lien. Filing deadlines, notice requirements, and the requirement to furnish labor or materials to the property all remain the same. What changes is the amount a claimant can include when perfecting a lien. That amount can now encompass the full scope of what one believes is due, including delay and disruption costs, without the same risk of forfeiture.
Who Can Claim a Lien and for What
The statute still limits lien rights to the same class of persons: laborers, mechanics, materialmen, contractors, subcontractors, builders, architects, engineers, and others. But the scope of what they can claim is broader. Consider a subcontractor that suffered two months of delay because an owner’s design changes disrupted its work. That subcontractor may now include those delay costs in its lien, provided the subcontract allows recovery of such costs. Previously, including anything beyond the direct value of labor and materials furnished, risked an excessive-lien challenge.
Notice, Timing, and Procedural Requirements
The bill does not change statutory deadlines or notice procedures. Lien statements, however, will likely grow more detailed and larger in dollar amount. Owners and lenders reviewing lien filings should expect to see line items for delay, disruption, and disputed amounts that would not have appeared in filings before 2026.
Allocating Risk
For subcontractors and suppliers: This change is a significant benefit. The good faith safe harbor reduces the chilling effect that the excessive lien penalty has long had on lien claims. A claimant can now file for the amount it genuinely believes is due without the same fear of forfeiture. One still must have a reasonable, good-faith basis for that amount.
For owners and general contractors: Expect larger lien claims and more difficulty challenging them as excessive. Excessiveness remains an affirmative defense; the owner or general contractor bears the burden of proving that the claimant lacked any reasonable possibility that the amount was due and knew the amount was inflated. The days of using the excessive-lien penalty as leverage to force conservative filings may be ending. Owners may see increased lien exposure on projects with disputed change orders or delay claims. Truly abusive filings — those lacking any good-faith basis — still forfeit lien rights and trigger mandatory fee-shifting for all attorney fees incurred in defending against the excessive claim.
For lenders: Mechanics’ lien exposure on construction loans may increase in dollar terms, because lien claims can now capture broader categories of costs. Title companies and construction lenders should update their risk assessments accordingly.
Project Financing, Bonding, and Payment Practices
Because liens can now include delay and disruption costs, the total potential lien exposure on a project is higher than before. This increase may affect how lenders size construction-loan reserves and how sureties evaluate payment bond exposure. On the payment practices side, the bill gives owners and general contractors a stronger incentive to resolve disputes earlier. If a dispute festers, the other side can now lien for the full disputed amount with reduced risk of penalty. Prompt payment and proactive dispute resolution have become even more important as risk management tools.
What To Do Now
S.B. 26-074 took effect August 12, 2026. Construction industry participants should consider consulting counsel about any pending disputes or projects where parties may have filed liens since the effective date. The new law meaningfully shifts the balance of lien rights in Colorado.
- Tabor v. Armstrong, 12 P. 157 (Colo. 1886).
- Ralph L. Wadsworth Constr. Co., LLC v. Reg’l Rail Partners, 2026 CO 19.
- Indep. Tr. Corp. v. Stan Miller, Inc., 796 P.2d 483 (Colo. 1990).
- Honnen Equip. Co., Inc. v. Never Summer Backhoe Serv., Inc., 261 P.3d 507 (Colo. App. 2011).
- Id.
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