• Colorado law allows parties protected by the lien statutes to waive their lien rights at any time after entering into a contract or even as part of their contract. It is important that a protected party not inadvertently waive its lien rights by signing a contract or separate document that contains lien waiver language.
• A pay-if-paid clause does not, by itself, waive mechanic’s lien rights.
• “Paid if Paid” is enforced if explicit.
• “Pay when Paid” suggests time for payment.
• Pay-if-paid provisions must unequivocally express the party's intent to establish a condition precedent to payment in order to be enforceable. A pay-when paid clause . . . is an unconditional promise by the general contractor to pay its subcontractor even if the owner becomes insolvent.
• Failure to timely pay any debts resulting from a construction agreement covered by the waiver commits a class 1 misdemeanor, unless there is a bona fide dispute as to the existence or amount of the debt. A class 1 misdemeanor is a crime in Colorado punishable by imprisonment of six to eighteen months, or fines of $500 to $5,000, or both." - Senate Bill 09-137
• Construction lien waivers must include language that essentially says that, “all debts owed to any third party by the person waiving the lien rights and relating to the goods or services covered by the waiver of lien rights have been paid or will be timely paid.” 38-22-119 of the Colorado Statute

Retainage Provisions

Public

• 24-91-103. Public entity - contracts - partial payments.  A public entity awarding a contract exceeding one hundred fifty thousand dollars, the maximum rate of retainage is 10 percent. Once 50 percent of the work is complete and progress is deemed satisfactory, the public entity shall not withhold additional funds. The public entity shall make a final settlement in accordance with section 38-26-107, C.R.S., within sixty days after the contract is completed satisfactorily and finally accepted by the public entity. Upon written request by the contractor, the public entity may authorize final payment to the contractor or subcontractors who have completed their work, if the entity finds satisfactory progress is being made. COLO. REV. STAT. § 24-91-103. The contractor is permitted to substitute securities in lieu of retainage and is entitled to all interest that accrues. COLO. REV. STAT. §§ 24-91-105, -108.