Lien rights depend on both contract language and state-specific filing rules. These recent New York and Colorado developments show why.
New York: A Forum Selection Clause Complicates Lien-Bond Enforcement
A recent New York appellate decision highlights a procedural risk for construction suppliers, equipment lessors, and anyone else who works in multiple states: a boilerplate forum-selection clause can affect where lien-related claims are heard, even though lien claims and enforcement suits must generally come in the state where work was done.
In Hammer & Steele, Inc. v. Environmental Mgt. Consultants, Inc., a Missouri equipment lessor provided equipment for a project in the Bronx. The rental agreement designated Missouri as the forum for all disputes, despite work being done several states away. When the lessor went unpaid, it filed a lien claim in New York, which was bonded off. The equipment lessor then filed suit in New York against that lien bond.
A New York trial court dismissed the action in 2024, including claims against the general contractor and surety, because the lease required claims to be brought in Missouri. The lessor did not appeal, and instead filed action in Missouri. In Missouri, the court found it lacked personal jurisdiction. So, the lessor went back to New York and sought to renew its previous motion.
Despite an initial ruling in the lessor’s favor, the New York appellate court rejected renewal. The court said the Missouri jurisdiction ruling did not qualify as a new fact or a change in law that justified revisiting the earlier dismissal in New York. The decision left the claims dismissed without looking at their underlying merits, which was an unfortunate break for the equipment lessor.
Why Project Teams Should Pay Attention
This back and forth between venues and dismissal of claims due to procedural reasons (and not the merits) is a frightening scenario for construction businesses. But it reiterates the importance of using standardized, proven agreements, and the need for legal review of contracts when working on an atypical project or across state lines. Generally speaking: Lien claims are heard where work is done because they affect real property in that state, and a contradictory forum selection clause can clearly complicate things.
Suppliers, lessors, and anyone doing work in multiple states should always review their forum selection clauses when bidding for work that’s in another state. While this outcome doesn’t come across as “fair” or equitable, it’s common for seemingly small procedural issues to undercut otherwise valid claims. It’s crucial to get the details right.
One option that might have helped here is adding language to the standard forum selection clause that carves out mechanics liens and related claims from the standard forum selection. Here, work was done in New York, but the contract said suits must be brought in Missouri. If the lessor had stated in their contract that mechanics lien claims and enforcement suits (plus related claims) could still be brought wherever the work was done – the initial ruling might not have come down and hamstrung their efforts.
Colorado: Broader Lien Claims, With Good-Faith Limits
Colorado’s SB 26-074, effective August 12, 2026, takes a different approach to lien risk by clarifying what amounts a claimant may include. It appears to come in direct response to and support of a major Colorado construction case whose decision was published the same day the act was signed:
The amendment loosens the belt on what amounts can be claimed on a Colorado lien, and it also provides for a more reasonable approach to potentially overstated liens.
Every state’s lien laws are different, but lien claims are typically limited to the value of the work, materials, or equipment that was provided but not paid for. Depending on the jurisdiction, this can include other damages or costs that could put the lien in jeopardy. Under the new Colorado amendment, which became effective in August, other contractually recoverable amounts can also be included in Colorado: recoverable delays, disruptions, lost-productivity costs, as well as disputed or unliquidated amounts, when those amounts are otherwise recoverable under the contract.
The law also changes how excessive lien allegations are assessed in Colorado. Overstating a mechanics lien could typically result in serious consequences, up to a potential felony in some jurisdictions. In Colorado, overstating a lien could result in the loss of all recovery options, including breach of contract.
For one, Colorado claimants now have a bit more latitude. They won’t be in violation of excessive claim provisions if the claimant reasonably believes, in good faith, that the amount represents the actual value of the work, materials, or labor they’ve provided (regardless of whether the amount is unliquidated or in dispute). For another, a final award that’s less than the the filed lien amount does not, by itself, establish that the lien was excessive (and thereby triggering potential penalties). Of course, knowingly including amounts with no reasonable possibility of being owed can still result in forfeiture of lien rights and attorney-fee exposure. Related changes extend to verified claims on public works so that they’re consistent with private lien claims.
Why Project Teams Should Pay Attention
This clarification on how Colorado liens should be calculated is a great reminder that lien laws change state-by-state, so companies with a multi-state footprint should account for that in their documents and processes. A cost category that may be included in a Colorado lien cannot automatically be included in a lien elsewhere. Teams should review the applicable statutes and the evidence supporting each amount before filing or evaluating a lien.
It’s also crucial for teams to know how their contracts impact potential recovery rights. The above revisions to Colorado law address what can be recovered if allowed under the contract. But if the contract states that some of those categories are not recoverable, they likely should not be included in a lien claim.
Which is to say: knowing different states’ lien laws will only help if you also understand how your contracts impact the ability to recover certain costs.
What Construction Teams Should Review
Lien rights and bond remedies remain state-specific, and teams should consult qualified counsel about their specific questions.
As a best practice, you should always review:
- Forum selection language in supply, rental, and subcontract agreements, including how it interacts with statutory enforcement.
- Change order, delay notice, and claim documentation supporting amounts that may later be disputed.
- Contract provisions relating to disputes and cost recovery.
- Lien waiver and claim preservation wording, particularly for complex or multiphase projects.
- General deadlines and procedures for contract and legal claims.
Choose the Right Lien Waiver for Every Payment
Just like lien claims, lien waiver requirements vary by jurisdiction, payment status, and project type. Learn how conditional, unconditional, progress, and final waivers operate before signing away valuable payment protections.
