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Is attempting to file a lien an appropriate strategy in this situation?

I have an LLC in MO and contracted with a large General Contractor also in Missouri to complete a half done project in Louisville, KY. The owner of the Louisville property pre-funded my payroll and materials with cash which was to be paid back as my invoives were paid through the monthly draw process. As the project continued the draws DID NOT process due to the owner not processing them. Therefor I have not paid back the cash advances OR been paid any profits. My time is very shortly running out to file a lien against the property and I'm concerned I could eventually be held responsible to pay back the advances without receiving payment for the invoices from the General Contractor. I signed an agreement upon receiving the cash advances SPECIFICALLY stating the advances to be paid back from the draw received from the General Contractor. My profit at this point represents about $14K. The outstanding invoices total approx. $614K. The cash advances total approx. $600K....I provided labor and materials and my last day on site was 3/24/17. It appears I may be entitled to ask for interest?

1 reply

Sep 7, 2017

There is a lot to unpack in this question, let's break it down into distinct parts.

Does this Work Qualify for Mechanics Lien Protection?

While there are not too many details regarding your work on the project, it is clear that a mechanics lien could be properly claimed for work done on the project. In Kentucky, parties entitled to mechanics lien protection include prime contractors, subcontractors, sub-subcontractors, material suppliers, equipment lessors, and licensed design professionals who contracted directly with the owner (architects, engineers, surveyors) on a construction project for the improvement of property.

Where Would the Lien Be Filed - Which Laws/Requirements Apply?

The laws governing any particular mechanics lien are the those of the location of the project. So, in this case, it doesn't matter that you or the GC are in Missouri - since the project is in Kentucky, Kentucky rules and requirements for mechanics liens apply.

What Are the Deadlines / Requirements for Filing a Lien in Kentucky?

Kentucky has mandatory notice requirements prior to the filing of the lien statement for some parties. A preliminary notice is required from any party who did not contract directly with the property owner, or his agent.

If the project was not an owner-occupied residence, all parties not contracting directly with the owner must provide written notice within 120 days of last furnishing labor or materials (since the claim is in excess of $1000). If the project happened to be an owner-occupied residence, the notice period would be shortened to within 75 days of last furnishing labor or materials to the project no matter what the claim amount. Further, any mechanics lien on an owner-occupied residential project is not effective to the extent the owner has paid the contractor, subcontractor or architect prior to receipt of notice.

Accordingly, since 120 days from March 24 is July 22 time may have already run out to protect your ability to file an enforceable lien. More information about Kentucky's lien and notice requirements can be found here: https://www.zlien.com/mechanics-lien/kentucky-lien-law-faqs/

It may be worth some time to talk to an attorney who can more closely examine your contract and situation to find the best way to a potential recovery.

In the future, it can help to take a look at any potential requirements for a different state at the start of the project so you can remain in a secured position.

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