Filing Kentucky Workman’s liens in general
Kentucky Workman’s liens are often stripped or can easily be stripped in Bankruptcy court. Complying with all of the different sections to perfect the lien is hard to impossible for most contractors. Often, the lien is invalid because the homeowner was not properly served and given notice as required by KRS 376.010.
There are services like https://www.levelset.com/ and https://www.lienitnow.com that can help a Workman file a lien and collect. First, remember that if you file the lien it probably ends your relationship with the contractor or homeowner. You are often better off if you can collect without filing a lien. But sometimes you have to file the lien to collect. Here is a list of the sections you must comply with to make a Workman’s lien enforceable. Workmanss Lien Law Statutes 2019
These are the rules that work for filing Workman’s liens against property owned by people and businesses. Different rules apply to a government-owned property. You must have either a contract or the written consent of the owner to file a Kentucky mechanics lien on a private project. No contract, no lien.
To strip one of these liens in bankruptcy look at your PVA value for the property and deduct any prior mortgages and 27,900 per person (2023 the real estate exemption) on the deed. If the contractor failed to comply with the regulations or there is no equity left the lien can often be completely stripped. If what is left is less than the lien then the lien can be partially stripped. You want to prove that the lien is invalid and too often the worker has waited too long to file the lien or the foreclosure.
A Workman’s Lien Pre filing Checklist:
Be sure to have a contract or don’t work.
Without a written agreement with the owner, you only have 75 days within your last work for contracts of $1,000 or less and 120 days for verbal contracts over $1,000.00 to file any lien. The different statute sections control the different types of contracts and liens.
You will also have problems proving the terms, including the amount is if you are forced to go to court. When the owner lives in the property, you only have 75 days regardless of the amount. Typically, you should file a preliminary notice before you file the lien. This 75-day requirement is only 60 days for verbal contracts.
If you are a contractor be sure to include the right to collect your attorney fees and court costs in your contract. You will want to recover these expenses if you have to sue to collect. The legal expenses will often be more than the contract.
Privity and ownership
For you to file a workman’s lien, the person you contracted must be with the owner of the property. If you contracted with the general but the owner failed to sign for and agree to be responsible you can’t hold the owner liable. Otherwise, there is no privity with the actual owner of the property, or there is no contract with the person who owns the property. Always check the title and deed records. Walgreens may only rent the land and may not have any real property to put a lien on.
When you file a Kentucky Workman’s lien, you must file a foreclosure within less than one year after the lien is filed.
If you want to foreclose, you must file a foreclosure within a year of filing the lien. Fail to file the foreclosure and you must wait with your lien until the property is sold. The lien acts very much like a mortgage on the home but your foreclosure must be filed within less than one year. In the case of foreclosing on government projects the time is about 180 days.
376.090 Limitation on action to enforce lien — Priority of lien.
- Any lien provided for in KRS 376.010 shall be deemed dissolved unless an action is brought to enforce the lien within twelve (12) months from the day of filing the statement in the clerk’s office, as required by KRS 376.080. If the debtor against whose property the lien is claimed dies before the expiration of the time prescribed for bringing the action, a further period of six (6) months from the date of the qualification of his personal representative shall be allowed within which the action may be brought.
Preliminary Statement of lien
You must file a Kentucky Workman’s lien within six months of the last time the property was worked on. But you should also provide notice to the owner and others in what is called a Preliminary statement of lien before you file the lien. If you fail to file this notice early, a buyer or mortgage may edge out your lien in priority. Your lien rights date from when you started work and filed this statement. A preliminary Statement KRS §376.010(2) gives potential mortgages and buyers notice. This means you can collect more fully for the lien. It may allow attorney fees if you use this option and have this as part of your contract.
You have to document the last date you provided services.
If you worked for a general contractor, you have to give preliminary notice to the owner within 120 days under KRS § 376.080. You must give notice to the general contractor within 75 days. This billing needs to be exact, and you need to subtract any interest, fees, and penalties that are not for the work. The address in the lien should include the legal description of the deed as well as the address. Be sure not to lien property if you contracted with the Tennant who leases the property. He no ownership interest and you may become liable to the owner. Likewise, be careful with filing the lien if the property has been sold or otherwise transferred out of the name you contracted with.
When you file the lien, the property owner must also be sent a copy within seven days.
We suggest the lien is sent by certified mail to prove it was sent.
If you are paid, you must release the lien on time or pay penalties to the property owner.
If the project is being financed, you can also collect from a performance bond or give the lender a stop notice to collect from the bank that funds the project.
