Mechanic's and Materialmen's liens in Kentucky are authorized by statute, KRS Chapter 376. The statutes allow contractors, subcontractors, laborers, and materialmen to place a lien on the property that they either worked on or provided material to. There are different sections of the KRS that address liens on public property vs. liens on private property liens. They are different distinct and do not overlap each other.
Timing of filing of the lien and Notice to the owner is crucial and cannot be altered or waived.
Lien Rights in Kentucky
There are four (4) requirements, per statute, that determine whether a party has the right to file a lien in Kentucky. A party must show:
Consent of an owner can be challenging if the party contracting for the improvement to land does not own the land (tenant, life tenant, buyer/vendee under a land contract). The party must prove that the owner gave actual consent or had actual knowledge of the improvement. If you have a question concerning consent, call the Attorneys at Sutton Law @ 859-578-6600.
There are Two (2) Classes of Lienholders: Those who dealt directly with the owner and those dealt indirectly with the owner. The distinction is important as it distinguishes between notice requirements.
1. Preliminary Notice - Filed in the Office of the Clerk in the Kentucky County in which the property is located. Preliminary notice does not create a mechanic's lien but is used to established priority for the mechanic lien holder against a mortgagee (bank) or other lienholder or person having an interest in the property. A Preliminary Notice Statement is not required to establish a good lien. Only it gives priority to a lien. Preliminary Notice Statement must contain:
i. Statement that claimant has furnished or expects to furnish labor or materials to property,
ii. Full amount of claim that may be asserted,
iii. A description of the property to be liened,
iv. Name of the owner of the property to be liened, and
v. Whether labor or materials were performed or were furnished under a contract and with whom.
If you properly file a Preliminary Notice Statement prior to the bank recording its mortgage or prior to the recording of any other type of contract liens, your lien will have priority over the mortgage or other lien.
2. Notice to Owner - A lien claimants who have not contracted directly with the property owner or his or her authorized agent must first give written notice to the property owner of their intention to claim a lien against the owner's property before filing one. A contractor or subcontractor of the owner is considered an "authorized agent" of the owner for purposes of notice. However, it is advisable to send notice any authorized agent and the actual owner. There are different Notice periods depending on the property value:
a. Claims Less Than $1,000: Notice must be given to the owner within seventy-five (75) days after the last item of material or labor was furnished.
b. Claims More Than $1,000: Notice must be given to the owner within one-hundred twenty (120) days after the last item of material or labor was furnished.
BEWARE: If the property is a residential property which is occupied by the owner as his or her primary residence, and you have NOT contracted with him or her, you must act quickly! You MUST notify the owner within forty-five (45) days that you have not been paid. IF the owner has already paid the contractor, you have no right to file for a lien on the property.
3. Statement of Lien (Final Notice) - A final notice MUST be given by a lien claimant in order to maintain his or her lien rights against the property. A Statement of Lien MUST be filed in the County Clerk's Office, in the county where the building or improvement is located, within six (6) months from the date you ceased furnishing labor or materials to the project. A Statement of Lien MUST contact the following five (5) requirements:
i. Name and Address of lien claimant
ii. Amount due (with all credits and set offs)
iii. A description of the property to be liened. Statute says "sufficiently accurate to identifying it."
iv. Name of the owner of the property to be liened, and
v. Whether labor or material were furnished under a contract with owner, contractor or subcontractor.
A copy of the Statement of Lien MUST be mailed to the property owner "at his or her last known address" within seven (7) days of the filing of the statement with the County Clerk's Office. If you fail to mail the Statement of Lien to the property owner within seven (7) days of filing, your lien is dissolved.
DURATION OF A LIEN AND ENFORCEMENT
A lien is valid for twelve (12) months from filing of the Statement of Lien. A lien is enforced through a lawsuit filed in the Circuit Court where the lien is filed within twelve (12) months of the filing of the lien. A lawsuit to enforce is similar to a foreclosure action. You must name the owner of the property and all other interested parties as party defendants. If a lawsuit is not filed within twelve (12) months, the lien is automatically dissolved and is no longer enforceable.
BOND TO RELEASE A LIEN
Bond must be executed before the County Clerk in which the lien was filed. A bond must be for double the amount of the lien claim, with good sureties. The bond is then substituted as security for the lien.
If you wish to talk with one of our attorneys call Sutton Law at 859-578-6600 or contact us online to discuss your legal matter and learn about your options.
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