Do you want to know how to strip a Kentucky Mechanics Lien? Interestingly, mechanics’ liens are similar to junior mortgages in bankruptcy. It is difficult to impossible to strip a statutory lien like a judgment lien. However, for a Kentucky mechanics’ lien to be valid, the person filing the mechanic’s lien must take the proper steps. If they have not taken the required steps, mechanics liens can be stripped just like any judicial lien statement when you file bankruptcy.
To strip any judgment lien, you must prove that it impairs the debtor’s exemption. But stripping a mechanic’s lien is best done by demonstrating A worker did not correctly file the mechanic’s lien. A mechanics lien is a unique legal tool that ensures the workman who worked on a home is paid. However, if there is no proper filing or it is not enforced by filing a foreclosure within a year, it becomes unenforceable.
How to Strip a Kentucky Mechanics Lien in Bankruptcy
A mechanic’s lien is a guarantee of payment to builders, contractors, and construction firms that build or repair structures. Mechanic’s liens also extend to suppliers of materials and subcontractors and cover building repairs as well. The lien ensures that the workmen are paid before anyone else in the event of a liquidation. —Investopedia
Filing bankruptcy may free you of being personally liable for the debt. But, a mechanic’s lien is just like a mortgage. It will survive bankruptcy if you do not destroy the lien by showing the lien is invalid. You can do that during the bankruptcy by objecting to the claim.
If you fail to use an experienced law firm, you may not get the judicial or mechanics lien removed during your case. You may get the discharge, but when you sit down to sell the home, the mechanic’s lien might have to be repaid. It might hold up the sale of a house or a home purchase. It takes about a month to reopen a bankruptcy case and strip a lien. A delay may force you to pay the lien in Kentucky. For over thirty years, we have been stripping judicial and other liens.
Who is Eligible to File a Kentucky Mechanics Lien?
Any worker or supplier can file a Kentucky mechanic’s lien. Still, the statute states that a supplier cannot be the lien claimant for materials unless the supplier directly supplies the materials to the job site. If the supplier provides materials to another supplier, then a mechanics lien does not apply.
The workman can be a lien claimant against a home governed by KRS 376.010(2) when a worker performs services or furnishes materials or equipment. We can also use other statutes, KRS 376.440 and KRS 376.445 to assert the lien. We think of a roofer, plumber, electrician, or painter when we think of filing a mechanics lien, but other workers can also assert a Kentucky mechanics lien.
Types of mechanics liens
1. Real estate Brokers, Engineers, Architects, and Land Surveyors have their statute, KRS 376.075, to assert a workers lien for their work.
2. Attorneys can assert lien rights in a lawsuit when they worked on the case and was not paid by the client from the proceeds. The rights of attorney lien claimant are outlined in (KRS 376.460).
3. Agister’s Liens are liens on livestock such as horses, cattle, or a livery stable that did not pay for food for the livestock. These liens are found in KRS 376.400, KRS 376.410, KRS 376.420
4. Veterinary Liens apply for services (KRS 376.470, KRS 376.475).
5. KRS 376.275 is a specific statute for motor vehicle towing and storage. A mechanic’s lien can be taken on a car for auto repair allowing the mechanic to sell or keep the vehicle. (KRS 376.270)
Can Unlicensed Workers Assert a Kentucky Mechanics Lien?
Homeowners often use the cheapest bid to do repairs. In repairs, the homeowner will often fail to get a licensed electrician to do the installation or repair. The fact that the plumber was not licensed is far more about whether the repair was done correctly. The question being raised by whether the work was done by a licensed professional is more about the quality of the work.
Typically home repairs are not required to be done by a licensed professional. The homeowner often knows or could have required the worker to be insured or licensed. The homeowner wanted the repairs done cheaper and often used the unlicensed installer.
If that is the case, it is not a valid argument later to complain about something the homeowner knew about to refuse payment. If the worker claimed to be licensed or insured in advertisements, the contract was induced by fraud, and the contract becomes unenforceable.
The Information Included in a Proper Kentucky Mechanics Lien is:
1. The name and address of the person or company claiming it has Kentucky mechanics lien rights. This is required by KRS 376.080. If a corporation’s process agent has to file a mechanics lien, you must include the name and address of your agent for service of process. This is also governed by KRS 376.080.
2. If you worked for a contractor or subcontractor authorized agent, you must include them by listing their names and addresses in the lien statement KRS 376.010 & KRS 376.080.
3. The lien in Kentucky is filed against the property owner, and their name and address must be listed. (KRS 376.080).
4. The legal property description to file the mechanics’ lien claim against must be specific enough to identify the property. Usually, the address is enough, but I like to attach a copy of the deed with its description. I always include the owner listed on the deed in the notice to ensure we have the proper owner. (KRS 376.080).
More Information Included in a Proper Kentucky Mechanics Lien
5. You must state the claim amount in your lien in Kentucky. This amount must include any set-offs or credits that should be deducted. The contract was normally with the owner or with a contractor or subcontractor. If you had a direct contract with the general contractor or subcontractor, you probably have no contract with the property owner and lack privity. You may still be able to sue the owner because he received the benefits of the labor or materials, but your contract lien claim may only be with the contractor. (KRS 376.010 & KRS 376.080)
6. When you file any interest in real estate and record it, certain information must be included. The information you need for the preparation statement is found in (KRS 382.335). Primarily, this is the name and address of the parties and the person who prepared the lien statement.
7. The county clerk will request a return mail address so you can be mailed a copy of the recorded lien. This means you need three copies: one for the court, one for you, and one to be mailed to the certified or registered mail to the person you are claiming the lien rights against (KRS 382.240).
8. The mechanics’ lien claim must be signed by an authorized corporate officer, the person claiming the lien, or their attorney. This signature must be notarized, and the notary format must be subscribed to and sworn under oath (KRS 376.080).
The information that must be included in a Kentucky mechanics lien is not the only item that can cause the lien in Kentucky to fail.
Other Required Information for a Kentucky Mechanics Lien
The information and timing of the mechanics’ lien must be perfect, or it isn’t very effective. Courts look over mechanics liens for any error. Like a will, the failure to flawlessly execute a statutory or non-consensual lien with the code’s required items means there is no lien. Timing especially is a problem.
Material or Mechanic Liens and Notice
If you fail to file the mechanic’s lien on time, you lose the right to file a mechanics’ lien claim on the owner’s property. If you fail to contract directly with the property owner, you must send a preliminary notice to the property owner. KRS 376.010(3) controls and requires the preliminary notice to be sent within 120 days after the work or materials were last provided.
Some workmen attempt to return to the worksite to inspect their work after the property owner has dismissed them from the project. Checking the work is probably not providing work or materials. This period is shortened to 75 days if the property is a residence or the amount is under one thousand dollars. General contractors may be exempt on private projects, but it isn’t intelligent to not send the preliminary statement and give the homeowner a reason not to pay.
Filing this preliminary statement is not just to protect you from the homeowner. If you file this preliminary statement, it also protects you from the other workman’s liens by establishing who is paid first. If the mechanics’ lien claim is appropriately filed, the lien can prioritize the mortgage by giving notice to the lender.
Most lenders will require the lien to be paid before taking a mortgage against the property. Always rush your preliminary statement of lien to the courthouse and file it if you have any indication of a problem. KRS 376.010(2) allows you to do this to protect your claims against a mortgage or buyer.
Releasing the Lien
It is common for mortgage companies to release a lien late after the mortgage has been paid. I have stripped off a second mortgage void after the statute of limitations had run. When the mortgage is no longer valid, a holder of the lien or mortgage should file a release. Why?
The failure to release a lien claim in Kentucky mechanics lien after the lien holder is given a 15-day notice allows the homeowner or property owner the right to sue the person for not filing the release. Why should you care? The penalty is 100 to 500 per day. If you forget to release it, that can add up quickly. When I spot this error, it is often years later.
You don’t have to release the lien within 15 days after a homeowner sends you the notice according to KRS § 382.365, but I suggest you not contribute to the homeowner’s retirement fund.
How to Defeat a Lien without Filing Bankruptcy?
For a worker to file a Kentucky Mechanics Lien, he must give written notice to a homeowner in a preliminary statement. Specifically, he has to notify the homeowner in writing within seventy-five days if the claim is less than one thousand dollars. Then, if the amount is over one thousand dollars, notice must be within one hundred twenty days.
This workman’s lien claim includes not only the labor but also the materials used in repair or construction. There are other requirements for the preliminary notices given to the owner. The special final warning must be given to the court county clerk’s office if the lien is superior to a mortgage or other lien rights holder. It may be just an unsecured note if it is junior to the mortgage.
A Kentucky Mechanics Lien statement created under KRS 376.010 can be superior to a mortgage filed after the workman’s lien. Without going through specific steps, the mechanic’s lien must be invalid to be stripped. The lien must be recorded at the same courthouse as the property intended. In Jefferson County, this is the clerk deed room.
The Kentucky mechanics lien needs to be filed within six months of the last day work was performed. The mechanic’s lien in Kentucky must be filed timely and cannot be filed late. The filing sent to the homeowner and the filing sent to the court county clerk must be filed perfectly and promptly. The Kentucky mechanics lien is sufficiently accurate and precise, containing the essential information. There are limits to what the workman may claim for the rental of tools, furnish labor, or materials. The lien claim must also include any set-offs or payments.
How to Strip a Kentucky Mechanics Lien or Judicial Lien in Bankruptcy?
In bankruptcy, the debtor has a right to a fresh start. This includes starting life with about $28,000 in their home’s equity. The federal exemption can be stacked for each person on the deed. For a husband and wife, the exemption doubles to $56,000—the equity in the home results from deducting your mortgage and exemptions from the property’s value. If money is left over, there is equity for the judicial lien to attach. If not, the judicial or workman’s lien can be stripped off and removed.
This is often done by filing a standard motion and order with the court. But a recent appraisal will probably be needed for the judge to determine no equity so that a mechanics lien in Kentucky can be stripped. Other proof may also be needed, such as a current mortgage statement or an estimate of required repairs. Stripping a judicial lien is allowed in bankruptcy but stripping a mechanics lien claim is more difficult because it isn’t explicitly provided for by lien statute. It is instead implied.
An imperfect workman’s lien that did not adequately file a Kentucky mechanics lien is easily defeated because it is a statutory lien. Essentially, stripping a statutory lien is different from stripping a consensual lien under the Kentucky law of bankruptcy. You have to look to the statute to find imperfections that almost always exist.
Contact our office if you need to strip a mechanic lien claim in your bankruptcy. It isn’t easy and needs to be done by an experienced and qualified bankruptcy attorney.
Information You Should Check
Doing a title check is best when you file this lien. A copy of the existing deed will provide you with the property description and prove who owns the property. Nothing is worse than suing the wrong person. If the homeowner doesn’t pay, he may not be telling the truth about who owns the property.
Sometimes the “owner” is merely leasing it or has sold it while you did the work. The failure to use the words “subscribed and sworn to” can also be fatal in filing a workman’s lien. If you fail to file a foreclosure within a year of filing this workman’s lien, the lien expires.
A copy of the lien claim or statement must be sent within seven days of filing the statement with the clerk KRS 376.080. If you send the statement by certified mail, you have proof notice was sent. The statute does not require that the notice is received. File the mechanics’ lien in the wrong county, the lien is void. An arbitration agreement does not eliminate these requirements to file a Kentucky mechanics lien.
Contact the Experienced Attorney for Kentucky Mechanics Lien Bankruptcy!
It is necessary to seek professional help when you don’t know much about the Kentucky law and processes. Therefore, contact the experienced and skilled attorney, Nick C. Thompson. I have over 33 years of experience filing bankruptcy, foreclosure law process, early bankruptcy discharge, and stripping mechanics lien Kentucky. Let me handle your case; you will surely get the desired results.
Resources for Bankruptcy
Louisville, Kentucky Bankruptcy Forms
The Financial Benefits of Chapter 13 Bankruptcy • Video
How to Avoid Mortgages & Strip Liens
Credit Repair After Bankruptcy • Video
Property Tax Foreclosure Bankruptcy
Do you need help managing your student loan? Contact my office right away to start the conversation. Nick C. Thompson, Attorney: 502-625-0905.
