A Colorado general contractor (CRC) failed to pay a plumbing subcontractor (Weize) and supplier (Martz) for completed work. When CRC tried to use a lien release bond to avoid trust fund obligations, the court rejected this defense. The court ruled that lien release bonds do not excuse contractors from holding money in trust for subs and suppliers, and awarded treble damages plus interest to the unpaid parties.
A lien release bond does not protect a general contractor from trust fund statute violations—you can still pursue treble damages even if a bond was posted.
Always record a lis pendens (notice of your lien claim) promptly or you may lose your lien foreclosure rights, even if you have other valid claims.
General contractors must hold funds in trust for subcontractors and suppliers regardless of bonding arrangements—this is a non-negotiable legal obligation in Colorado.