Kentucky Foreclosure Law
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: No
- Primary Security Instrument: Mortgage
- Timeline: Varies
- Right of Redemption1: Yes
- Deficiency Judgments2 Allowed: Yes, but with restrictions
Lenders in the state of Kentucky may foreclose on a mortgage in default using the judicial foreclosure process. Kentucky is strict about not allowing out-of-court foreclosures unless they are voluntary sales by the borrower. A deed of trust sale, sale by a trustee or a power of sale clause in a mortgage doesn’t work in this State.
The only exception is if the borrower abandons the property. If that happens, the lender may obtain possession of the property once the borrower goes into default.
Judicial Foreclosure
A judicial process of foreclosure requires that the lender file a lawsuit and attain a court order to foreclose on a particular property.
Judicial Foreclosure Procedure
An appraisal of the property is ordered prior to the scheduled date of the foreclosure sale. The borrower has a one year (12 month) redemption period from the date of the sale, if the foreclosure sale price was less than two-thirds of the appraised value. In order to redeem, the borrower must pay the amount for which the property sold plus interest.
If the borrower was personally served with the lawsuit or failed to answer the notice, the lender can obtain a deficiency judgment against the borrower for the difference between the amount the borrower owed on the original loan and the foreclosure sale price.
1 A borrower’s right to reacquire property lost due to a foreclosure.
2 A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.
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