The construction industry is on the rebound in Kentucky and throughout the rest of the country. In northern Kentucky, our river cities are booming with various development projects. Nevertheless, in a good or bad economy, contractors and subcontractors encounter payment problems.
Kentucky’s mechanic’s lien statutes, found in Kentucky Revised Statutes (“KRS”) 376, provide protection to construction companies who furnish materials and labor on public or private projects.
While some of the statutes’ terms are interpreted liberally, Kentucky courts have consistently held that lien claimants must strictly comply with the notice requirements of KRS 376. Due to the demands of the construction industry, contractors and subcontractors routinely miss these deadlines and forfeit the leverage and security that accompany a mechanic’s lien. The general notice requirements for private projects can be simplified into four steps:
(1) Preliminary Statement of Lien. The lien claimant should file a Preliminary Statement of Lien with the county clerk to secure priority over subsequently recorded liens. While the Preliminary Statement of Lien is not required to establish a valid mechanic’s lien, it protects the lien’s precedence. Since it’s not required, there is no deadline to file the Preliminary Statement of Lien.
(2) Notice of Intent to File Lien. Prior to filing the Lien Statement, subcontractors must notify in writing the owner of the property to be held liable or his authorized agent, of their intent to file a lien. This notification must be completed within 120 days on claims in excess of $1,000 (75 days on claims amounting to less than $1,000) after the last item of material or labor is furnished.
(3) Lien Statement. Lien claimants must file their Lien Statement with the county clerk within 6 months of the last day on which the lien claimant last furnished labor or materials. KRS 376.080(1) imposes strict requirements on the form of the Lien Statement.
(4) Notice to Property Owner. The lien claimant must send by regular mail a copy of the Lien Statement to the property owner at his last known address within seven days of filing the Lien Statement. Failure to follow this last requirement dissolves the lien.
In my practice, when a client anticipates payment problems, I immediately calendar all four steps on my personal calendar and on my firm’s litigation practice group calendar. I have forms for all four steps so when a deadline arrives, I’m prepared to take action. Should your company encounter payment problems, I’d encourage you to contact a construction lawyer familiar with the ins and outs of KRS 376. While many of the deadlines seem simple, they often involve complex factual issues.
Kyle Winslow is a trial attorney with Hemmer DeFrank Wessels PLLC. He represents construction professionals on many aspects of public and private projects, including the preparation and enforcement of mechanic’s liens and bond claims, contract negotiation, arbitration, and the litigation of contract disputes. He is licensed to practice law in Kentucky, Ohio, and Indiana.