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Home>Levelset Community>Legal Help>Can a construction material supplier apply money paid by a GC to a Subcontractor to projects other than that which was paid for by the GC and then file a lien for the artificially inflated amount against the project?

Can a construction material supplier apply money paid by a GC to a Subcontractor to projects other than that which was paid for by the GC and then file a lien for the artificially inflated amount against the project?

KentuckyMechanics Lien

A roofing material supplier was paid by a subcontractor with money down the chain from Owner to GC to Subcontractor specifically for stored material and since the Subcontractor didn't specify the project to apply the funds, the supplier applied most of the money to older outstanding amounts due from the Subcontractor. The supplier then filed a "Notice of Intent to File a Lien" on the project for the artificially inflated amount since they only applied a part of those funds to the project.

1 reply

Mar 27, 2019
That's an interesting situation, and I'm sorry to hear that you're having issues on this job. First, when a mechanics lien is filed in excess of what's allowable, that lien will generally be invalid and unenforceable. Note, though, that in some situations, the amount of a lien might be adjusted downward prior to the lien being deemed invalid and unenforceable - potentially by a court or by the claimant themselves. Under § 376.220(3) of the Kentucky mechanics lien statute, if a lien is filed in an amount that exceeds the amount actually due, the party who filed the mechanics lien will be liable for the damages incurred in dealing with the lien - including court costs, attorney fees, and other potential damages of the injured parties. Further, when an exaggeration is intentionally made, that might result in additional liability - most states have harsh penalties for filing fraudulent liens. In Kentucky, if a claimant files a document that the claimant knows or should know is groundless, contains material misstatements, or false claims, the claimant could face criminal penalties under 434.155 of the Kentucky statutes. With that in mind, warning a prospective lien claimant that their lien filing would be invalid, or at worst - fraudulent, could help fend off a potential lien claim when there are no grounds for the claim. Keep in mind, though, that when there's a payment dispute at hand, attempting to first talk out the dispute can often be fruitful and resolve an issue without the need for official legal action. It might be possible to level with a potential lien claimant by explaining the situation and why a mechanics lien would be improper without letting tempers flare. Plus, if a claimant in unreceptive, the option of taking a more-official route would always be available. For more information about Kentucky lien claims, as well as access to the Kentucky mechanics lien statute, this resource should be valuable: Kentucky Lien & Notice Overview. These resources might be helpful, too: (1) I Just Received a Notice of Intent to Lien – What Should I Do Now?; (2) Frivolous Mechanics Liens: Intentionally Fraudulent vs. Honest Mistakes.
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