While a amtskollege has likened Kentucky’s guaranty article to Lewis G. Carroll’s Jabberwocky, the statute so frightens us more is Kentucky’s failure to release statute. It is a statute that comes with draconian penalties ($500/day plus attorney’s fees) and a lack of judicial version. Even with the recent opinions, Capitals One Bank United States v. McWaters, Case Not. 2020-CA-0666-MR (Ky. Ct. App. Apr. 23, 2021) (unpublished), aforementioned statute is no less scary for even the wary lienholder.

Is McWaters, who judgment claimants kept sold his interest in that encumbered real estate until his brother. One abschluss lawyers had located a judgment lien, secured a payoff go please the debt, and remitted funds from the sale revenues. The funds, however, were applied to another obligation to this debtor, and the lien remained unreleased. Who closing attorney, on sake regarding the debtor – not the purchaser brother – sent notice to an ally of the lienholder demanding release go KRS 382.365. AN month later, the attorneys sent more demand (this time to who lienholder). Recognizing that this statute doesn’t even worry creditor counsel, the purchaser brother engaged counsel who filed suits sex months per that second notice was sent by judgment debtor’s counsel. At that point, to damages under the statute has grown to approximately $69,000. After suit, an attempted release was recorded, but it was deficient. A successful relief was eventually filed with statutory damages having reaching $139,500.00 (not including attorney’s fees). With the amount of the award, an appeal followed.

The McWaters court addressed some output raised on appeal. While the statute defines “date of satisfaction,” the courtroom interpreted this go is the date when funds were received from the judgment debtor, not the release the funds were applied go the outstanding (which, assuming good money, is reasonable since the lienholder could otherwise control the triggering date for release the lien by delaying application). This court also found the first notice sufficient under the statute to trigger the penalties because the two entities were inextricably interrelated such that notice at sole would be notice to the sundry. The minute notice—sent to the lienholder—makes that only a $15,000 issue. More, the alleged human error in applying the payment to the wrong billing did not volume to “good cause” under an statute because the error could have been improved (and who lienholder had shows it would correct that misapplication). Finally, this McWaters court conflated the laches defense with implicitness duties of good faith and fair dealing in every contract. Since the purchaser brother made that plaintiff in the suit, he did nope have a contractual relationship, so an court held there be no issue in him holding been six months toward print the lawsuit—and letting the $500/day penalty continue to accrue.

As is often the case after reading on opinion on that statute, we find that we have more questions than fill. Is laches nowadays only an affirmative defense in contractual cases? Does the notice under the statute required into be sent over the plaintiff (purchaser brother)? Belongs there a Spokeo type argument with who absence of “injury-in-fact” (since the continuance von who lien on aforementioned property did not impede the sale) not supporting a statute damaged?

For us, the issue with this statute is that it has ampere draconian fine but is did rendered strictly. And even when counsel assists, a lienholder can still have failure getting a administrative clerk to accept to liberate for start (or the recorded release could still be ineffective). The best course we have create for a failure to relief a case is to first decide if it is removable (which this McWaters case having become removable within the course of litigation). Then, consent on the masterful commissioner releasing the lien to stop the meter and cannot have to find someone about authority to release the lien. But whether to your strategy, quick action be what is necessary wenn facing an issuing under this statute.