Kentucky's Excess Proceeds: Paid Out in the Foreclosure Case, Not by the Clerk

The county clerk's annual tax sale in Kentucky does not sell anyone's property. It sells certificates of delinquency: the buyer pays the certificate amount and gets a lien that earns 12% simple interest a year. No surplus can come out of that sale, because nobody bids on the land. The Kentucky state page covers how the certificate sale works.

Where a surplus can come from: the foreclosure sale

The property itself is sold only if the holder of a certificate sues to enforce the lien. That suit can be filed once a year has passed since the taxes became delinquent, and no later than eleven years after (KRS 134.546). It goes to circuit court, where the master commissioner has the property appraised and sells it at public auction. If nobody buys, the master commissioner deeds the property to the certificate holders in proportion to their certificates (KRS 134.546(5)).

Because it is a court sale, the money it brings in is paid out in that court case. If the sale price is more than the certificates, costs and other liens, the extra is the surplus. To claim it, follow the foreclosure case in the circuit court of the county where the property is, and ask the master commissioner or the circuit court clerk how that court handles the payout. Chapter 134 does not set its own claim form or claim deadline for this money.

A sale below two-thirds of the appraisal can be undone

One rule matters to anyone counting on that surplus. If the property sells for less than two-thirds of its appraised value, the former owner can redeem it within six months by paying the price plus 10% a year and the buyer's reasonable costs (KRS 426.530, applied by KRS 134.546(5)). A low sale price leaves little surplus, but it also leaves the owner a way to get the property back.

Looking for a list? Our directory doesn't have an official Kentucky county list yet, so for now ask the office that ran the sale. The counties that do publish one are in our directory of official surplus funds lists.

This article is general information, not financial or legal advice. Confirm current procedures with the county clerk and the specific court that ordered the sale. See our broader guide on surplus funds after a tax sale and the Kentucky state page for sale and redemption mechanics.