Monitoring expenses and collecting receivables is critically important for any business in today’s economy. For those in the construction industry, knowing and understanding the mechanic’s and materialman’s lien laws in the states in which you operate is a key component in your collection efforts. What follows is a brief primer to assist your organization in effectively exercising lien rights on private commercial projects in Kentucky. You first need to know the legal name and address of the party with whom you are contracting. You also need to know whether that party is the owner of the property being improved or is a tenant, general contractor or subcontractor of the owner. Determine this information when your contract is signed. Do not wait until a payment issue arises to determine this information.
Many states require a subcontractor, materialman or supplier to give a pre-lien notice to an owner with whom they did not contract. In Kentucky, a subcontractor, materialman or supplier must give a Notice of Intent to File a Lien to the owner of the property being improved. The notice is required to preserve subcontractor, supplier and materialmen lien rights. For private liens on commercial projects in excess of $1,000, the notice must be sent to the owner within 120 days from the date you last performed work or supplied material to the project. Send the notice via regular and certified mail, return receipt requested, to ensure delivery and have a record of transmittal.
In Kentucky, your pre-lien notice requirements and your lien filing deadlines are measured from the date you last supplied labor or materials or last worked on a project. Tracking your last activity with respect to a project is critically important to preserving your lien rights. You should have a system in place for monitoring applicable lien deadlines. If an account has not been paid within 45 days of the date of your invoice or 45 days from the date of your last activity on a project, whichever is later, you should be thinking about exercising your lien rights. If you are a subcontractor, materialman or supplier, you should be thinking about sending your Notice of Intent to File a Lien to the owner at this time.
You must file your lien affidavit within six months after you stop working or providing materials for a private Kentucky project. The lien affidavit must be recorded in the office of the county clerk of the county in which the project is located. Requirements for the contents of the lien affidavit are set forth in Chapter 376 of the Kentucky Revised Statutes. A copy of the recorded lien affidavit must also be sent to the owner within seven days of recording.
You must sue to enforce your private Kentucky lien within one year from the date of filing. Lien rights are statutory in nature. Failure to follow the statutory requirements can be fatal to your lien claim. I strongly recommend that you seek legal assistance with any lien issues your business may encounter.
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