Question 1

What is considered a delinquent real estate tax?

Accepted Answer

A delinquent real estate tax refers to a property tax that has not been paid by its due date. In the context of Kentucky's guidelines, as per Kentucky Revised Statute (KRS) 134.015, real estate taxes are typically due by December 31 of the assessment year. If these taxes are not paid by this deadline, they are considered delinquent starting from January 1 of the following year.

The process of managing these taxes involves several stages and potential penalties. Initially, taxes can be paid from November 1, with early payments by November 1 qualifying for a 2% discount. Payments made between November 2 and December 31 are processed at the standard amount, without any discount or penalty.

However, once the deadline of December 31 passes, penalties begin to apply. Payments made between January 1 and January 31 of the following year incur a 5% penalty. If the payment is made after January 31, the penalty increases to 10%. Additionally, unpaid taxes are subject to further management and penalties, including statutory interest charges of 1% per month until the taxes are fully paid.

These delinquent taxes are initially managed by the County Sheriff's Office and later transferred to the County Clerk's Office if they remain unpaid past a certain date, usually April 15. Additional notifications and public notices may be issued to inform taxpayers of their delinquent status and impending actions like tax sales.

In summary, a delinquent real estate tax is a tax that has not been paid by the end of the calendar year in which it was assessed, with various penalties and additional charges applying from January 1 of the following year.

Question 2

What other costs are added to the property tax after it becomes delinquent

Accepted Answer

Delinquent tax collection fees and interest will be added to tax bills once they become delinquent.

Below is the current tax bill fee schedule, but check the KRS for updates:

SHERIFF'S COLLECTION PERIOD

COUNTY COLLECTION PERIOD

If a tax bill is sold, the 3rd party purchaser will add additional penalties. Property owners will need to contact the 3rd party purchaser if their bill is sold. If the bill is not sold, it continues to accrue interest at 1% per month.

Question 3

What happens when a tax bill is bought?

Accepted Answer

In Shelby County, Kentucky, when property taxes become delinquent, the process of lien management and payment involves several key steps. Once the County Clerk’s Office takes over the delinquent tax accounts, these are often assigned to a third-party entity, known as a Third-Party Purchaser. This assignment is officially recorded in the land records maintained by the County Clerk’s Office.

After acquiring the lien, known as the Certificate of Delinquency, the Third-Party Purchaser is obligated to notify within 50 days that they have purchased the tax bill. Property owners must then direct their payments for the delinquent taxes to this Third-Party Purchaser. This payment includes not only the original tax amount but also any penalties and interest that the Third-Party Purchaser has added subsequent to their purchase of the lien. These additional charges are subject to specific state-regulated guidelines to ensure fairness and legality.

Once the property owner settles the full amount owed to the Third-Party Purchaser, including taxes, penalties, and interest, the Third-Party Purchaser is responsible for filing a Release of Assignment of Certificate of Delinquency with the County Clerk’s Office. This filing, which clears the lien from the property records, must be completed within 30 days of receiving the full payment. This process is part of the legal framework ensuring the proper management and collection of delinquent property taxes in Shelby County.

Question 4

Who can purchase a tax bill?

Accepted Answer

Under Kentucky law, both individuals and companies have the opportunity to buy delinquent tax bills, except for those that are marked as protected by the County Attorney. These protected tax bills typically involve cases under bankruptcy, pending litigation, or are part of a payment plan arranged with the County Attorney. The County Clerk does not have the authority to predict or prevent the sale of these tax bills.

Question 5

How long does the property owner have to buy back the tax bill?

Accepted Answer

The purchaser of a delinquent tax bill has the legal right to start a foreclosure process in court for the unpaid amount one year after the bill is considered delinquent. For example, tax bills from 2012 would be delinquent as of January 1, 2013, and could be subject to foreclosure starting January 1, 2014. However, due to the interest rates applied to the delinquent amounts, some buyers might choose not to immediately pursue collection, especially if the property owner's equity in the property is higher than the owed tax debt. The time limit for enforcing a Certificate of Delinquency is 11 years from the date the taxes were originally declared delinquent.

Question 6

Why is there a lien on my property?

Accepted Answer

A lien is filed against your property in Shelby County if you have deliquent property taxes. The lien is a public record of the amount you owe and is filed with the County Clerk’s Office. If you attempt to obtain credit or sell the property it could prevent you.  The cost of releasing the lien will be added to the delinquent tax account at the time the lien is filed.

Frequently Asked Questions About Delinquent Tax Collection

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Delinquent Tax Collection