Discharge of Lien by Corporation or LLC
Note: This summary is not intended to be an all inclusive discussion of Kentucky’s construction or mechanic’s lien laws, but does include basic provisions.
What is a construction or mechanic’s lien?
Every State permits a person who supplies labor or materials for a construction project to claim a lien against the improved property. While some states differ in their definition of improvements and some states limit lien claims to buildings or structures, most permit the filing of a document with the local court that puts parties interested in the property on notice that the party asserting the lien has a claim. States differ widely in the method and time within which a party may act on their lien. Also varying widely are the requirements of written notices between property owners, contractors, subcontractors and laborers, and in some cases lending institutions. As a general rule, these statutes serve to prevent unpleasant surprises by compelling parties who wish to assert their legal rights to put all parties who might be interested in the property on notice of a claim or the possibility of a claim. This by no means constitutes a complete discussion of construction lien law and should not be interpreted as such. Parties seeking to know more about construction laws in their State should always consult their State statutes directly.
Who can file a lien in this State?
Kentucky law permits Any person who performs labor or furnishes materials, for the erection, altering, or repairing of a house or other structure or for any fixture or machinery therein, for the excavation of cellars, cisterns, vaults, wells or for the improvement in any manner of real property including the furnishing of agricultural lime, fertilizer, concrete pipe or drainage tile, crushed rock, gravel for roads or driveways, and materials used in the construction or maintenance of fences, by contract with, or by the written consent of, the owner, contractor, subcontractor, architect, or authorized agent, shall have a lien thereon, and upon the land upon which the improvements were made or on any interest the owner has therein, to secure the amount thereof with interest as provided in K.R.S.A. 360.040 and costs. K.R.S.A. § 376.010.
Also, Kentucky law permits certain professionals (Professional Engineers, Land Surveyors, Licensed Architects and Landscape Architects) to claim a lien for the cost of services rendered. K.R.S.A. § 376.075.
How long does a party have to file a lien?
A lien claimant must file a Notice of Furnishing within six (6) months after he ceases to labor or furnish materials. A copy of the Notice must be sent by regular mail to the property owner within seven (7) days of filing. K.R.S.A. § 376.080.
Professional engineers, land surveyors, licensed architects and landscape architects also have six (6) months to file a notice to protect their liens. K.R.S.A. § 376.075(4).
What kind of notice is required prior to filing a lien?
Kentucky law does not provide for a specific notice prior to a lien filing. However, please note that a Notice of Furnishing is required as a prerequisite to the filing of a claim.
By what method is a lien filed in this State?
Within six (6) months of completing work, a lien claimant must file a Notice with the county clerk. As stated above, the lien claimant then has seven (7) days to provide the property owner with a copy via regular mail. K.R.S.A. § 376.080.
How long is a lien good for?
Any lien created under Kentucky law will be deemed to have dissolved unless a suit if filed ot enforce the lien within twelve (12) months from the date of the filing of the Notice of Furnishing. If the property owner passes away before this time has expired, an additional six months from the date of the qualification of the deceased’s personal representative. K.R.S.A. § 376.090.
Are liens assignable?
Kentucky statutes on construction liens do not specifically speak to whether liens may be assigned to other parties.
Does this State require or provide for a notice from subcontractors and laborers to property owners?
Yes. Kentucky law does not allow a party who has not contracted directly with the property owner to claim a lien unless the lien claimant issues a Notice to Owner. If the claim is less than $1000, the claimant has seventy-five days (75), if more that $1000, the claimant has one hundred twenty (120) days to mail to the property owner by regular mail to the owner’s last known address. K.R.S.A. § 376.010(3).
In addition, Kentucky makes the distinction that a party who has not contracted directly with the property owner of an owner occupied single or double family dwelling, may not claim a lien unless the claimant issues a Notice to Owner within forty-five (45) days. K.R.S.A. § 376.080(4).
Does this State require or provide for a notice from the property owner to the contractor, subcontractor, or laborers?
No. Kentucky law does not provide or require specific notices from the property owner to contractors, subcontractors, or laborers.
Does this State require a notice prior to starting work, or after work has been completed?
No. Kentucky statutes do not require a Notice of Commencement or a Notice of Completion as in some other States.
Does this State permit a person with an interest in property to deny responsibility for improvements?
No. Kentucky statutes do not have a provision which permits the denial of responsibility for improvements.
Is a notice attesting to the satisfaction of a lien provided for or required?
No. Kentucky statutes do not provide for or require that a lien holder who has been paid produce or file a notice to that effect. However, please see KY-08-09 Release of Lien as an example of a form that could be used by a lien holder to provide a property owner with documentation that the lien has been satisfied after payment in full.
By what method does the law of this State permit the release of a lien?
As stated above, Kentucky statute has no specific provision for the release of a lien, other that the automatic dissolution that occurs if suit to enforce the lien is not brought within twelve (12) months.
Does this State permit the use of a bond to release a lien?
Yes. Kentucky law permits a party with an interest in the property in question to file a bond in the amount of twice the lien claim with the county clerk. If the bond is approved, upon its execution the lien upon the property shall be discharged. K.R.S.A. § 376.100.
