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If you have delinquent property taxes in Kentucky, you might lose your home to tax foreclosure. In other parts of the state, the tax lien itself is sold, and the purchaser gets a tax lien certificate. After some time passes, the certificate purchaser can foreclose. The home is then sold at a foreclosure sale. Either way, you'll get some time either before or, in some limited situations, after the foreclosure sale, in which you can pay off the debt and keep your home. But if you fail to do so, you'll eventually lose ownership of the property.
People who own real property must pay property taxes. The government uses the money that these taxes generate to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property's assessed value.
If you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly mortgage payment to later pay the property taxes. The servicer pays the taxes on the homeowner's behalf through an escrow account.
But if the taxes aren't collected and paid through this kind of account, the homeowner must pay them directly.
When homeowners in Kentucky don't pay their property taxes, the overdue amount becomes a lien on the property. (Ky. Rev. Stat. Ann. § 91.560). A lien effectively makes the property collateral for the debt.
All states, including Kentucky, have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes. In Kentucky, you might face a tax lien foreclosure or lose your home after a tax lien certificate sale.
In some places in Kentucky, if you don't pay your property taxes, the collector can file a lawsuit to enforce the tax lien. The home is sold, usually at a public auction, as part of the process. (Ky. Rev. Stat. Ann. § 91.487).
When the court confirms the sale after the redemption period (see below), the purchaser from the sale gets a deed (title) to the property and becomes the new owner. (Ky. Rev. Stat. Ann. § 91.514).
The collector must mail you a notice within 30 days after filing the suit. (Ky. Rev. Stat. Ann. § 91.4884). The collector will also publish a notice about the action in a newspaper. (Ky. Rev. Stat. Ann. § 91.4883).
How the Right to Redeem Usually Works
Many states give delinquent taxpayers the chance to pay off the amounts owed and keep the home, even after a tax sale happens. This process is called "redeeming" the property. Exactly how long the redemption period lasts varies from state to state. However, in some states, the redemption period happens before the sale.
Under Kentucky law, you get the right to pay off the debt (redeem) the property at any time before the foreclosure sale takes place. (Ky. Rev. Stat. Ann. §§ 91.4884, 91.511).
You'll also get the right to redeem within 60 days after the sale if the purchase price is less than the home's assessed value. (Ky. Rev. Stat. Ann. §§ 91.4884, 91.511).
Look Out for Legal Changes
In this article, you'll find details on property tax sale laws in Kentucky, with citations to statutes so you can learn more. Statutes change, so checking them is always a good idea.
To find the statutes covering property tax sales in Kentucky, as well as the statutes that cover redeeming your home in Kentucky, go to §§ 91.420 through 91.610 (suits by the collector) and 134.010 through 134.990 (tax lien certificate sales and foreclosures) of the Kentucky Revised Statutes.
How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting an attorney if you're facing a tax sale.
If you don't pay your property taxes in other parts of Kentucky, the county clerk may sell the tax lien that's on the home. (Ky. Rev. Stat. Ann. § 134.128).
The purchaser buys a tax lien certificate (a "certificate of delinquency") at the sale and can eventually foreclose on the home to collect the amounts due. At the end of the foreclosure process, the property is sold at a foreclosure sale. (Ky. Rev. Stat. Ann. § 134.546).
Two notices of the delinquency are mailed before the certificate sale. (Ky. Rev. Stat. Ann. § 134.504). Notice about the certificate sale is also published in a newspaper. (Ky. Rev. Stat. Ann. § 134.128).
After the certificate sale, the purchaser who bought the certificate must mail you a notice within 50 days after the clerk delivers the certificate of delinquency to that third-party purchaser and annually thereafter until the notice described below is sent. (Ky. Rev. Stat. Ann. § 134.490).
If the third party, state, county, or taxing district gets the certificate and later decides to foreclose, notice must be mailed to you within 45 days before starting a foreclosure. (Ky. Rev. Stat. Ann. § 134.490).
The purchaser can't start a lawsuit to foreclose until one year after the date the taxes became delinquent. (Ky. Rev. Stat. Ann. § 134.546). You can redeem the home during this one-year period.
You also get an additional redemption period if the property is sold for less than the assessed value. If the property sold for less than two-thirds of its appraised value at the sale, the additional redemption period is six months. (Ky. Rev. Stat. Ann. §§ 134.546, 426.530).
If the state, county, or taxing district forecloses the lien, the property may be redeemed at any time before the master commissioner gives a deed to the purchaser. (Ky. Rev. Stat. Ann. § 134.549).
To redeem the home, you'll have to pay the total taxes, interest, penalties, and costs due (Ky. Rev. Stat. Ann. §§ 91.511, 134.546, 426.530).
If you're already facing a tax foreclosure in Kentucky and have questions (or need help redeeming your property), consider talking to a foreclosure lawyer, tax lawyer, or real estate lawyer.