On April 6, 2026, the same day that the Colorado Supreme Court issued its decision in Ralph L. Wadsworth Construction Company, LLC v. Regional Rail Partners, Governor Jared Polis signed Senate Bill 26-074 into law. The legislation, which took effect on August 12, 2026, clarifies the amounts that may be included in mechanic’s liens and public construction payment claims, as well as the circumstances under which those claims may be considered excessive.
While the timing of the Supreme Court’s decision and the Governor’s approval of SB 26-074 is noteworthy, the legislation has implications extending beyond the public works claims addressed in Wadsworth. Most significantly, it expressly addresses disputed and unliquidated amounts, including delay and disruption costs, in mechanic’s liens filed against private construction projects.
For Colorado’s owners, developers, general contractors, and subcontractors, the changes warrant careful consideration.
From Wadsworth to SB 26-074
As we discussed in our previous article addressing the Colorado Supreme Court’s decision in Wadsworth, the Court concluded that disputed and unliquidated amounts, including certain delay and disruption damages, may properly be included in verified statements of claim under Colorado’s Public Works Act.
SB 26-074 provides additional statutory clarification and extends similar principles to Colorado’s Mechanics’ Lien Act, C.R.S. § 38-22-101, et seq.
The legislation makes four principal changes:
- Expressly permits contractually recoverable delay, lost productivity, and disruption costs in mechanic’s liens.
- Clarifies that disputed or unliquidated amounts may be included in lien claims.
- Establishes that recovering less than the amount claimed does not automatically render a lien excessive when the claimant had a good-faith basis for the amount asserted.
- Makes corresponding changes to verified statements of claim and excessive-claim provisions under the Public Works Act.
Although the amendments provide additional protection to contractors and subcontractors asserting payment claims, they do not eliminate the statutory consequences of knowingly filing excessive claims.
Delay and Disruption Costs May Be Included in Mechanic’s Liens
Perhaps the most significant amendment is the addition of subsection (7) to C.R.S. § 38-22-101.
The new provision expressly states that nothing in Colorado’s Mechanics’ Lien Act prohibits the inclusion of costs otherwise allowed under a contract, including costs incurred because of delays, lost productivity, or other disruptions to the work.
Consider a subcontractor performing work on a commercial construction project. During construction, the subcontractor experiences repeated scheduling changes, interference from other trades, and delays that require additional labor, equipment, and supervision. The subcontractor submits a claim for $200,000 in additional costs, which the general contractor disputes.
Under the amended statute, the disputed nature of those costs does not necessarily prevent their inclusion in a mechanic’s lien.
There is, however, an important qualification. The statute permits inclusion of costs otherwise allowed under the contract.
That language matters.
SB 26-074 does not create an independent right to recover delay damages, nor does it necessarily override enforceable contractual provisions limiting such recovery. No-damages-for-delay clauses, notice requirements, change-order procedures, and other contractual limitations may still determine whether the claimed amounts are recoverable.
In other words, the fact that a particular category of damages may be included in a mechanic’s lien does not establish that the claimant is contractually entitled to those damages.
When Is a Mechanic’s Lien Excessive?
The legislation also amends C.R.S. § 38-22-128, which addresses excessive mechanic’s liens.
Under Colorado law, a claimant who knowingly files a lien for more than the amount due, without a reasonable possibility that the claimed amount is owed, risks forfeiting lien rights and becoming liable for costs and attorney fees associated with challenging the lien.
SB 26-074 adds two important clarifications.
First, a court’s ultimate award of less than the amount claimed does not automatically establish that the lien was excessive, provided the claimant had a good-faith basis to believe the amount was due when the lien was filed.
Second, the statute now expressly recognizes that an amount may be considered due when the claimant reasonably believes, in good faith, that it represents the value of qualifying labor, services, equipment, or materials, even if the amount is disputed or unliquidated.
Consider a contractor who files a $500,000 mechanic’s lien for unpaid work and disputed change orders. Following litigation, the court determines that the contractor is entitled to only $300,000.
The $200,000 difference does not, standing alone, establish that the lien was excessive.
Instead, the inquiry focuses on what the contractor reasonably believed when the lien was filed, the information available at that time, and whether there was a good-faith basis for the amounts claimed.
This distinction is significant because construction payment disputes frequently involve competing interpretations of contracts, disputed quantities, contested change orders, and disagreements concerning responsibility for delays.
The fact that an owner disputes a claim does not necessarily make the claim excessive. Likewise, the fact that a contractor ultimately fails to prove the entire amount does not establish that the original claim was improper.
The statute continues, however, to impose meaningful consequences when a claimant knowingly asserts amounts that have no reasonable possibility of being due.
What About Public Construction Projects?
SB 26-074 makes corresponding amendments to Colorado’s Public Works Act, including C.R.S. §§ 38-26-107 and 38-26-110.
The amendments expressly recognize that verified statements of claim may include disputed amounts and costs otherwise allowed under a contract, including delay, lost productivity, and disruption costs.
The legislation also clarifies the good-faith standard applicable to excessive verified statements of claim and revises the statutory language governing forfeiture.
These amendments are consistent with the principles discussed in Wadsworth, although the statutory changes should be evaluated independently from the Supreme Court’s interpretation of the prior law.
Importantly, the excessive-claim provisions continue to expose claimants to potential liability for costs and reasonable attorney fees when the statutory requirements are satisfied.
Contractors and subcontractors performing public work should therefore continue to carefully evaluate the factual and contractual bases for their claims before filing verified statements of claim or pursuing payment bond remedies.
Practical Implications for Colorado’s Construction Industry
For owners and developers, SB 26-074 may increase the scope and amounts of mechanic’s liens asserted against their properties. Claims may expressly include categories of contractually recoverable costs beyond unpaid contract balances, including delay and lost productivity costs.
Owners should not assume that a lien is excessive merely because it includes disputed change orders or amounts that have not been approved. Instead, the analysis should focus on whether the claimed amounts are recoverable under the contract, whether they fall within the statutory requirements, and whether the claimant had a reasonable, good-faith basis for asserting them.
For general contractors, the legislation reinforces the importance of contract administration and project documentation. Disputed subcontractor claims may ultimately result in mechanic’s liens against an owner’s property, even when the general contractor believes that the claimed amounts are unjustified.
General contractors should carefully document disputed change orders, scheduling impacts, notices of delay, and the reasons for rejecting requests for additional compensation.
For subcontractors and suppliers, the amendments provide additional clarity concerning the inclusion of disputed and unliquidated amounts. However, the good-faith standard does not excuse unsupported claims or eliminate the need to comply with contractual requirements.
A subcontractor asserting delay or lost productivity costs should be prepared to substantiate those costs through contemporaneous project records, labor and equipment documentation, schedules, and other evidence establishing the basis for the claim.
For all parties, the lesson is largely the same. The contract matters, documentation matters, and the circumstances existing when a claim is filed matter.
Conclusion
SB 26-074 represents an important clarification of Colorado’s mechanic’s lien and public construction payment claim statutes.
By expressly recognizing disputed and unliquidated amounts, including contractually recoverable delay and disruption costs, the legislature has provided additional protection to contractors and subcontractors pursuing payment for their work.
At the same time, the legislation preserves the distinction between legitimate payment disputes and knowingly excessive claims.
For owners, developers, and general contractors, the amendments may complicate efforts to challenge mechanic’s liens based solely on the disputed nature or amount of the claim. For contractors and subcontractors, they provide greater certainty concerning permissible claims, while preserving the obligation to assert those claims reasonably and in good faith.
As always, careful contract drafting, diligent project administration, and thorough documentation remain among the best tools for avoiding payment disputes and minimizing the risks associated with mechanic’s liens and public construction claims.