Property Tax Liens In Kentucky
Property Tax Liens In Kentucky begin for the new year at the close of business on April 15th. On this date all the unpaid property tax bills are transferred from the sheriff to the county court clerk.
These unpaid property tax bills are now known as “Certificates of Delinquency”. And this “Certificate of Delinquency” represents a lien against the property that was subject to the tax bill.
Interest begins to accrue on the total amount that was due to the County Sheriff at a rate of 1% (one percent) per month.
In addition, a 10% fee is added for the County Court Clerk and a 20% fee is added for the County Attorney. These fees in addition to the original amount due at the County Sheriff’s Office.
At this point you are not yet able to purchase these Certificates of Delinquency.
The County Attorney first is required to send a letter to the delinquent taxpayer. For those yet unpaid a second notice is required to be sent. These delinquent taxpayers are no longer allowed to pay their tax bills to the County Sherif. But they are allowed to pay them in the County Court Clerk’s Office.
But none of this means anything to you as the investor.
In July, the County Clerks will offer the Certificates of Delinquency for sale to all third party purchasers.
Specific information pertaining to the actual dates for each County are available on the local County Court Clerk’s website. You can find an updated copy of these URL’s here.
These sales generally run through the fall with the majority of the sales taking place before the end of August. But there is no standard statewide date. This allows you to attend several sales should you so desire.
Make sure you review the above County Court Clerk websites. These websites will maintain a current list of the Certificates of Delinquency that will be for sale.
Once you purchase a Certificate of Delinquency the property owner must now work with you to arrange payment.
In Kentucky, you will be purchasing from the County Court Clerk. To perform your due diligence you will be studying records from the Property Valuation Administrator in each county. Some have online files. Many PVA’s provide this information for free online.
To purchase property tax liens in Kentucky you are must register. You are required by The Kentucky Department of Revenue to register as a “third party purchaser”. This registration must be done prior to purchasing property tax liens.
All third party purchasers who meet the following conditions must register with the Department of Revenue;
- Plan to purchase more than three certificates of delinquency in a county;
- Plan to purchase more than five certificates of delinquency statewide; or
- Plan to invest more than $10,000 in certificates of delinquency.
I think the beauty of in the State of Kentucky is their $100 administrative fee. While the state allows you to earn a simple interest rate of 1% per month, they also allow this $100 administrative fee which we see used to increase yield.
The small guy purchasing a hundred dollar lien and adding a hundred administrative fee comes out quite well indeed. Kentucky also gives a bit of advantage to the small investor since they hold a lottery style sale.
Many people call it an auction, but actually in Kentucky it’s not an auction at all. The clerk simply goes around the room and asks you to select which liens you wish to purchase. Prior to the sale begins you will have a drawing to see who goes first, second and so on.
Then after the sale starts, each purchaser may be limited to a select number per round. For instance, if you are number one you may be able to purchase 5 liens. You announce the ones you want. Then you can select another 5 when your turn comes up again.
This keeps the large funds from simply purchasing the entire lot.