Colo. Rev. Stat. » Title 38
Colorado Revised Statutes

Colo. Rev. Stat. § 38-22-127 (2026)

Moneys for lien claims made trust funds - disbursements - penalty

✓ current as of July 2026
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(1) All funds disbursed to any contractor or subcontractor under any building, construction, or remodeling contract or on any construction project shall be held in trust for the payment of the subcontractors, laborer or material suppliers, or laborers who have furnished laborers, materials, services, or labor, who have a lien, or may have a lien, against the property, or who claim, or may claim, against a principal and surety under the provisions of this article and for which such disbursement was made. (2) This section shall not be construed so as to require any such contractor or subcontractor to hold in trust any funds which have been disbursed to him or her for any subcontractor, laborer or material supplier, or laborer who claims a lien against the property or claims against a principal and surety who has furnished a bond under the provisions of this article if such contractor or subcontractor has a good faith belief that such lien or claim is not valid or if such contractor or subcontractor, in good faith, claims a setoff, to the extent of such setoff. (3) If the contractor or subcontractor has furnished a performance or payment bond or if the owner of the property has executed a written release to the contractor or subcontractor, he need not furnish any such bond or hold such payments or disbursements as trust funds, and the provisions of this section shall not apply. (4) Every contractor or subcontractor shall maintain separate records of account for each project or contract, but nothing contained in this section shall be construed as requiring a contractor or subcontractor to deposit trust funds from a single project in a separate bank account solely for that project so long as trust funds are not expended in a manner prohibited by this section. (5) Any person who violates the provisions of subsections (1) and (2) of this section commits theft, as defined in section 18-4-401, C.R.S.

Source: L. 75: Entire section added, p. 1420, § 2, effective October 1. L. 2000: (1) and (2) amended, p. 211, § 13, effective August 2.

Notes of Decisions
Cited in 45 cases (6 in the last 5 years), 1979–2026 · leading case: Fowler & Peth, Inc. v. Regan, 151 P.3d 1281 (Colo. 2007).
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Fowler & Peth, Inc. v. Regan, 151 P.3d 1281 (Colo. 2007). · cites it 44× “In 1975, two additional claims were created to protect subcontractors, laborers, or material suppliers: (1) claims may be made against a trust fund created by section 38-22-127, C.R.S. (2006) [4] —the Trust Fund Statute; and (2) a contractor can post a bond and a subcontractor,…”
People v. Mendro, 731 P.2d 704 (Colo. 1987). · cites it 54× “However, the court ruled that a prosecution under the theft statute for violation of the mechanic's lien statute, section 38-22-127, 16A C.R.S. (1982), required proof of an additional element of mens rea.”
People v. Adams, 243 P.3d 256 (Colo. 2010). · cites it 28× “The PDJ concluded that Adams did not hold valid assignments of claims belonging to creditors under the Colorado Trust Fund Statute, section 38-22-127, CRS. (2010). The PDJ determined that Adams acted in a representative capacity by pursuing the legal rights of these creditors on…”
Stetson Ridge Assocs., Ltd. v. Walker (In Re Walker), 325 B.R. 598 (Bankr.D. Colo. 2005). · cites it 30× “” According to plaintiffs, debtor Walker stood in a “fiduciary capacity” to them by operation of the so-called Colorado Mechanics’ Lien Trust Fund Statute, C.R.S. § 38-22-127. That statute states in pertinent part: All funds disbursed to any contractor or subcontractor under any…”
Yale v. AC Excavating, Inc., 295 P.3d 470 (Colo. 2013). · cites it 58× “T 1 In this case, we address whether funds received by a limited liability company from one of its members to capitalize the company must be held in trust for the payment of subcontractors, laborers, and material suppliers under Colorado's construction trust fund statute,…”
Weize Co. v. Colorado Reg'l Constr., Inc., 251 P.3d 489 (Colo. Ct. App. 2010). · cites it 5× “§ 38-22-127. The trial court found a trust fund violation and rejected CRC's good faith defense as follows: The Court finds CRC obtained control over funds from the owners; CRC knowingly used such funds; and such funds were to be held in trust under the construction trust fund…”
Jw Const. Co., Inc. v. Elliott, 253 P.3d 1265 (Colo. Ct. App. 2011). · cites it 6× “1988) (analyzing section 38-22-127, C.R.S.2010). They contend that the excessive lien statute imposes similar liability upon the officer of a corporation who files an excessive lien.”
Flooring Design Assocs., Inc. v. Novick, 923 P.2d 216 (Colo. Ct. App. 1995). · cites it 20× “Second, the objectives of § 38-22-126 differ markedly from those of § 38-22-127. Thus, we cannot presume, as Novick argues, that the term “disburser” applies with equal force to each statute.”
MacArthur Co. v. Cupit (In re Cupit), 514 B.R. 42 (Bankr.D. Colo. 2014). · cites it 8× “] section 38-22-127 is not immune from prosecution because of his ignorance of that statute’s existence.”
Bemas Constr., Inc. v. Dorland (In Re Dorland), 374 B.R. 765 (Bankr.D. Colo. 2007). · cites it 14× “23 Defendants rely on Regan for the proposition that, because Plaintiff no longer has a potential lien 24 under the Trust Fund Statute, there is no standing to assert a claim consistent with — or analogous to — the reasoning in this iteration of Regan referred to by the…”
Adams v. Thomas, 387 B.R. 808 (D. Colo. 2008). · cites it 8× “Specifically, he claimed that Debtor had violated the provisions of C.R.S. § 38-22-127 (the “Trust Fund Statute”), which requires that all funds disbursed to any contractor in a construction project be held in trust for payment to “subcontractors, laborer or material suppliers,…”
Syfrett v. Pullen, 209 P.3d 1167 (Colo. Ct. App. 2008). · cites it 8× “Pullen, appeals from a judgment entered against him, individually, in favor of plaintiff, Billie Syfrett, on her claim under the Mechanic's Lien Trust Fund Statute (Trust Fund Statute), § 38-22-127, C.R.S.2008. We affirm the result, but remand for modification of the form of…”
Show all 45 citing cases →
— Colo. Rev. Stat. § 38-22-127(1) — 25 cases
Stetson Ridge Assocs., Ltd. v. Walker (In Re Walker), 325 B.R. 598 (Bankr.D. Colo. 2005). “” According to plaintiffs, debtor Walker stood in a “fiduciary capacity” to them by operation of the so-called Colorado Mechanics’ Lien Trust Fund Statute, C.R.S. § 38-22-127. That statute states in pertinent part: All funds disbursed to any contractor or subcontractor under any…”
Fowler & Peth, Inc. v. Regan, 151 P.3d 1281 (Colo. 2007). “In 1975, two additional claims were created to protect subcontractors, laborers, or material suppliers: (1) claims may be made against a trust fund created by section 38-22-127, C.R.S. (2006) [4] —the Trust Fund Statute; and (2) a contractor can post a bond and a subcontractor,…”
Yale v. AC Excavating, Inc., 295 P.3d 470 (Colo. 2013). “T 1 In this case, we address whether funds received by a limited liability company from one of its members to capitalize the company must be held in trust for the payment of subcontractors, laborers, and material suppliers under Colorado's construction trust fund statute,…”
People v. Adams, 243 P.3d 256 (Colo. 2010). “The PDJ concluded that Adams did not hold valid assignments of claims belonging to creditors under the Colorado Trust Fund Statute, section 38-22-127, CRS. (2010). The PDJ determined that Adams acted in a representative capacity by pursuing the legal rights of these creditors on…”
Flooring Design Assocs., Inc. v. Novick, 923 P.2d 216 (Colo. Ct. App. 1995). “Second, the objectives of § 38-22-126 differ markedly from those of § 38-22-127. Thus, we cannot presume, as Novick argues, that the term “disburser” applies with equal force to each statute.”
— Colo. Rev. Stat. § 38-22-127(2) — 4 cases
People v. Anderson, 773 P.2d 542 (Colo. 1989).
Fowler & Peth, Inc. v. Regan (In Re Regan), 311 B.R. 271 (Bankr.D. Colo. 2004).
Climax Molybdenum v. Specialized Installers, Inc. (In Re Specialized Installers, Inc.), 12 B.R. 546 (Bankr.D. Colo. 1981).
Mordhorst Cleaning v. Cardamone (Colo. Ct. App. 2024).
— Colo. Rev. Stat. § 38-22-127(3) — 3 cases
Fowler & Peth, Inc. v. Regan (In Re Regan), 311 B.R. 271 (Bankr.D. Colo. 2004).
In Re W. Urethanes, Inc., 61 B.R. 243 (Bankr.D. Colo. 1986).
Mordhorst Cleaning v. Cardamone (Colo. Ct. App. 2024).
— Colo. Rev. Stat. § 38-22-127(4) — 5 cases
MacArthur Co. v. Cupit (In re Cupit), 514 B.R. 42 (Bankr.D. Colo. 2014). “] section 38-22-127 is not immune from prosecution because of his ignorance of that statute’s existence.”
Adams v. Thomas, 387 B.R. 808 (D. Colo. 2008). “Specifically, he claimed that Debtor had violated the provisions of C.R.S. § 38-22-127 (the “Trust Fund Statute”), which requires that all funds disbursed to any contractor in a construction project be held in trust for payment to “subcontractors, laborer or material suppliers,…”
Bemas Constr., Inc. v. Dorland (In Re Dorland), 374 B.R. 765 (Bankr.D. Colo. 2007). “23 Defendants rely on Regan for the proposition that, because Plaintiff no longer has a potential lien 24 under the Trust Fund Statute, there is no standing to assert a claim consistent with — or analogous to — the reasoning in this iteration of Regan referred to by the…”
ASCI Readi-Mix & Asphalt Specialties, Co. v. Gamboa (In Re Gamboa), 400 B.R. 784 (Bankr.D. Colo. 2008).
Yale v. AC Excavating, Inc., 295 P.3d 470 (Colo. 2013). “T 1 In this case, we address whether funds received by a limited liability company from one of its members to capitalize the company must be held in trust for the payment of subcontractors, laborers, and material suppliers under Colorado's construction trust fund statute,…”
— Colo. Rev. Stat. § 38-22-127(5) — 13 cases
People v. Adams, 243 P.3d 256 (Colo. 2010). “The PDJ concluded that Adams did not hold valid assignments of claims belonging to creditors under the Colorado Trust Fund Statute, section 38-22-127, CRS. (2010). The PDJ determined that Adams acted in a representative capacity by pursuing the legal rights of these creditors on…”
People v. Mendro, 731 P.2d 704 (Colo. 1987). “However, the court ruled that a prosecution under the theft statute for violation of the mechanic's lien statute, section 38-22-127, 16A C.R.S. (1982), required proof of an additional element of mens rea.”
Pritchard Concrete, Inc. v. Barnes (In Re Barnes), 377 B.R. 289 (Bankr.D. Colo. 2007).
MacArthur Co. v. Cupit (In re Cupit), 514 B.R. 42 (Bankr.D. Colo. 2014). “] section 38-22-127 is not immune from prosecution because of his ignorance of that statute’s existence.”
Syfrett v. Pullen, 209 P.3d 1167 (Colo. Ct. App. 2008). “Pullen, appeals from a judgment entered against him, individually, in favor of plaintiff, Billie Syfrett, on her claim under the Mechanic's Lien Trust Fund Statute (Trust Fund Statute), § 38-22-127, C.R.S.2008. We affirm the result, but remand for modification of the form of…”
— Colo. Rev. Stat. § 38-22-127(8) — 1 case
Weize Co. v. Colorado Reg'l Constr., Inc., 251 P.3d 489 (Colo. Ct. App. 2010). “§ 38-22-127. The trial court found a trust fund violation and rejected CRC's good faith defense as follows: The Court finds CRC obtained control over funds from the owners; CRC knowingly used such funds; and such funds were to be held in trust under the construction trust fund…”
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