Advanced Investing Insights

Expert Interview on the Kentucky Foreclosure Process with Randy Saunders

Rachel Seidensticker
Sign-up to receive an Unprecedented Report of sale results data nationwide.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Check out Tax Sale Insiders for the latest industry news and insights.

Download the full white paper on the Kentucky Sale Process by Randy Saunders of Nelson Mullins Riley & Scarborough.

Tax attorney Randy Saunders of the Nelson Mullins Riley & Scarborough firm has many years and extensive experience with tax sale law in Kentucky as well as several other states, and his law firm works in tax sales nationwide. He has also co-authored several white papers, including one about the unique ways that tax sales and foreclosures are conducted in Kentucky.

Why Kentucky’s Traditions Are Important to Account For

Saunders emphasizes, “You need to do your homework beforehand because there are many intangibles that can impact long-term success.  It goes back to the importance of land that’s often passed down from generation to generation.” To illustrate that significance, and the complexities it can create, he points out that, “You have more family cemeteries on property in Kentucky on small plots than in any other state.” That makes it easy to understand why following the local rules – and taking time to cultivate relationships and establish your reputation − is so important.

The Tolling Period or Redemption Period in Kentucky

There are many nuances to the foreclosure process in Kentucky, and those can vary quite a bit from one county to the next. They start with a one-year required “tolling period.” During that time, a foreclosure cannot be filed for a tax delinquency.  The tolling period starts on the date that the delinquency is filed with the county. Once the tolling period is over, because foreclosures are a judicial process, a foreclosure lawsuit must be filed – and you have 10 years to do that. But 45 days prior to filing that action, you must send notification to the delinquent taxpayer. However, it is only required that you notify that owner. 

Payment Plans and Appraisals

Another critical step in Kentucky is that you must attempt to work out a payment plan – or an installment payment plan – with the taxpayer, to help make it as financially feasible as you can for them to redeem. Once all proper steps are taken, the Master Commissioner will appraise the property and set a time for the foreclosure sale. The tax certificate purchaser can bid at the foreclosure sale, and if the appraised value is met and other rules have been followed correctly, the purchaser becomes the rightful legal owner of the property. But if a property does not sell for more than two-thirds of its appraised value, then the taxpayer is given an additional six months to redeem the property. 

Use a Mortgage Servicer for Support

“It’s also not a bad idea to have a mortgage servicer in the background,” adds Saunders, “who is responsible for paying the taxes on the property.” The property is the only secured collateral they have against their loan, so it’s in their best interest. Speaking of interest, your financial interest will continue to accrue as an investor – which is why many investors are willing to let the lien sit there and accrue interest for several years. Eventually, the mortgage servicer will likely redeem. So, even if the delinquent taxpayer fails to stick to the payment plan you agreed upon, the mortgage servicer involvement can serve as an extra layer of investment protection. 

Don’t Just Dabble, Do Your Homework with Due Diligence

Saunders reiterates that you need to perform thorough due diligence, and to become familiar with the rules and practices of each specific county where you operate. You don’t want to just dabble in tax sale foreclosures in the Commonwealth of Kentucky

In the Commonwealth of Kentucky, you need to follow every step and provide all of the required legal notifications according to the statutes. That way, when you arrive at the judicial phase of the foreclosure, you can convince the court that you’ve done everything possible to offer the taxpayer an opportunity to redeem. As Saunders emphasizes, “You want to make it easy for the judge to say that you’ve done everything you were supposed to do. That’s why in some jurisdictions it is advisable that you engage local legal counsel to ensure you are successful.”  

Learn More about Kentucky Tax Sales

That is why it is incumbent upon investors to become as familiar with the Kentucky’s foreclosure practices as possible. But you can learn a great deal more and take a much deeper dive by reading the comprehensive white paper that Saunders co-authored, and by watching the full podcast interview Brian Seidensticker recorded with Saunders. You can also learn more about the entire Kentucky tax sale process in the other interview with Saunders and Seidensticker.

Author - Rachel Seidensticker
Rachel Seidensticker
Chief Operations Officer
In the Tax Sale Industry Since 2010
Rachel is responsible for managing and overseeing the daily operations of Tax Sale Resources, which produces data for approximately 8,000 nationwide tax sales yearly. She started in the tax sale industry originally as an investor but decided to change course and team up with her brother (Brian Seidensticker) to build Tax Sale Resources quickly thereafter.

Featured Articles

Looking for which sales have the best returns?

Sign-up to receive an unprecedented report of sale results data nationwide.
Benefit Check
Sale Sizes
Benefit Check
Winning Bid Details
Benefit Check
Details by Property Type
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.