If you are a construction professional in Kentucky, you must familiarize yourself with the ins and outs of filing a mechanics lien.
A mechanics lien is the single most effective weapon that can help you recover payment from delinquent clients. A mechanics lien is attached to a property’s records and effectively warns potential buyers to not purchase the property unless they want to inherit the outstanding debts that are related to it. Property owners are therefore wary of dealing with a mechanics lien because it limits the marketability of their property.
This detailed guide will walk you through the steps in filing a valid mechanics lien in Kentucky. A mechanics lien is an effective tool for payment recovery, but there are still rules and requirements that you must follow if you want it to work for you.
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- Who can file a Kentucky mechanics lien?
- Pre-lien notices in Kentucky
- How to file a Kentucky mechanics lien: 4 Steps
- Best practices when filing a mechanics lien in Kentucky
Who can file a Kentucky mechanics lien?
According to Kentucky Revised Statutes Chapter 376, contractors, subcontractors, material suppliers, equipment lessors, and design professionals can all file a mechanics lien in Kentucky. Except for design professionals, all other parties are not required to hold specific licenses for their lien rights to be effective.
Suppliers to suppliers are, unfortunately, not allowed to file a mechanics lien in Kentucky, as in most states.
Pre-lien notices in Kentucky
The only required pre-lien notice in Kentucky is the Notice to Owner of Intent to Lien. All parties who are not in direct contract with the property owner must serve this notice before they can record a valid mechanics lien.
Notice to Owner of Intent to Lien
There is no specific information required to appear in the Notice to Owner of Intent to Lien. A typical Notice to Owner, however, contains the following details:
- Your name and address
- The name and address of the property owner
- The name and address of the party who hired you
- A general description of the service that you provided/will be providing
When to serve a Notice to Owner of Intent to Lien
There are two main deadlines for serving the Notice to Owner of Intent to Lien:
1. Within 75 days of the last day of work
- For parties whose contracts are worth $1,000 or less
- For parties working on owner-occupied single or double residential dwellings
2. Within 120 days of the last day of work
- For parties whose contracts are worth over $1,000
If you are working on owner-occupied residential dwellings and your contract is over $1,000, your deadline for serving the Notice to Owner will still fall on the 75-day time frame.
How to serve the Notice of Intent to Owner
You must serve the notice using certified mail or registered mail.
The Notice to Owner of Intent to Lien must be sent to the last known address of the property owner. Note that the notice is considered sent once it has been successfully delivered.
Notice of Contract
A Notice of Contract is another pre-lien notice in Kentucky, although filing it is not mandatory. The benefit of filing this notice is you get to have lien priority as long as you record it before any mortgage or other claims are recorded.
Differences between the Notice to Owner of Intent to Lien and the Notice of Contract
The Notice of Contract is different from the Notice to Owner of Intent to Lien because you have to record it in the county recorder’s office instead of serving it on the property owners.
There are no strict deadlines for recording a Notice of Contract. If you want to secure the benefit of having lien priority over other claims, you are encouraged to serve this notice as early as possible before other claims are recorded.
What happens if you fail to serve a pre-lien notice in Kentucky?
Failing to serve a Notice to Owner of Intent to Lien automatically revokes your lien rights. Even if you file a complete and well-prepared mechanics lien on time, your lien will be invalidated if you fail to comply with the Notice to Owner requirement.
Failing to file a Notice of Contract does not have any fatal consequences with regards to your lien rights. You may still file your mechanics lien as usual.
How to file a Kentucky mechanics lien: 4 Steps
1. Prepare the mechanics lien document
Information to include in the mechanics lien form
You must secure the following information and include them in your Kentucky mechanics lien form:
- Your name and address
This is your own information. Beware of typographical errors. The most common mistakes include spelling mistakes and failing to write the accurate business name, i.e. dropping suffixes like Ltd. and Inc.
- The name and address of the property owner
This is the name and the last known address of the property owner.
- The unpaid amount that you are claiming
This is the amount that you are trying to recover. Make sure that you only stick with the amount related to your work; do not include attorney expenses and other lien-related costs.
- A description of the property that is sufficient for identification
A legal property description is not necessary, although it will help if you have it ready. Otherwise, a specific physical address should be enough, as long as the property can be clearly identified using that address.
- A statement stating whether the services were rendered under a direct contract with the owner or with a contractor or subcontractor
This is a simple statement that explains which party hired you to work on the project, whether it is the property owner or the general contractor or subcontractor.
Kentucky mechanics lien notarization
A mechanics lien in Kentucky must be sworn under oath. Ensure that you not append your signature on your mechanics lien document until you are in the presence of an authorized notary officer.
2. Record the mechanics lien
Once the form is ready, you may record your mechanics lien in the clerk’s office of the county where your project is located. Be ready to pay the appropriate lien filing costs.
When to record a mechanics lien in Kentucky
In Kentucky, all mechanics liens must be recorded within 6 months of the last day of work. Note that this does not include warranty services and another miscellaneous task.
3. Serve a copy of the mechanics lien on the appropriate parties
After recording your mechanics lien, you have 7 days to serve a copy of the recorded lien on the property owner. This is one way of letting them know that a lien has been attached to their property, and of encouraging them to produce payment.
Serving a copy of the lien is typically done using certified or registered mail. You should secure proof that the copy has been served on the property owner.
4. Enforce/release the lien
Once your mechanics lien has been filed and the owner has already received a copy of the lien, the next step is to wait for your payment to arrive.
If the payment arrives, you have 30 days to file a lien release in the recorder’s office of the county where you filed the mechanics lien. Releasing a lien is a step that frees up the burden on the property owner once they already settled the outstanding debt related to their property. Note that a lien release must also be notarized before you may record it.
If the payment does not arrive, you have to enforce the mechanics lien within 12 months or 1 year after the recordation date. Enforcing a lien implies initiating a foreclosure lawsuit against the property. If you win the suit, you will likely recover your money from the proceeds of the auction of the property.
Note that enforcing a year within the 1-year time frame is very important. A mechanics lien is not valid forever. If you fail to enforce your mechanics lien within this period, the mechanics lien will lose its hold over a property and you may not be able to recover payment in any way.
Also keep in mind that before initiating a foreclosure lawsuit, you may send the property owner a Notice of Intent to Foreclose first. This is not a mandatory step in Kentucky, but notifying an owner of your intention to file a suit may be enough to encourage them to pay up.
Important dates to remember when filing a mechanics lien in Kentucky
Best practices when filing a mechanics lien in Kentucky
1. Serve a Notice to Owner of Intent to Lien promptly
The Notice to Owner of Intent to Lien is integral to protecting your lien rights. If you fail to serve this notice, you automatically lose your rights to recover payment via a mechanics lien.
Because the deadlines for serving this notice is based on the last day of work, most parties make the mistake of waiting until the 75th or 120th day before they serve this notice. Some parties even assume that warranty work counts toward their last day.
Your compliance with this notice requirement may be questioned if you serve it at the last minute, so make sure that you prepare and mail this notice earlier than the deadline.
2. Ensure that you Kentucky mechanics lien is notarized before filing
A mechanics lien in Kentucky must be notarized for it to be valid. Some parties make the mistake of signing their mechanics lien document before going to the notary office.
Because the mechanics lien must be sworn to by the lien claimant, you are required to have a notary officer act as your legal witness as you attest to the accuracy of your lien claim. You must therefore sign your mechanics lien form in the presence of a notary officer before you can have it recorded in the clerk’s office.
3. Send a Notice of Intent to Foreclose before initiating a foreclosure action
If you have not received your payment and your lien is about to expire, consider sending a Notice of Intent to Foreclose to the property owner. While not a strict requirement, sending a Notice of Intent to Foreclose can be good enough to encourage property owners to produce payment.
A Notice of Intent to Foreclose is a simple notice that informs the property owners that you are about to file a suit against them because of an outstanding debt. By doing this, you are setting an ultimatum and letting them know that they are about to deal with a full-blown lawsuit unless they pay up.