When a commissioner holds a sale, he is allowed to collect his costs and charge attorney fees. This is only reasonable. Most commissioners work overtime to make sure the homeowner is allowed every opportunity to save his home. But the homeowner has a responsibility to make sure he is not overcharged by the lenders. If you have a pending Kentucky Commissioner foreclosure sale make sure the lender does not overcharge you.
Kentucky Commissioner Foreclosure Sales Costs, Fees, Refunds, Deposits, and Redemptions
The Commissioner’s fees are set at 3% of the value of the home. In Louisville, the Commissioner earns 3% of the appraised value of the home. If the sale is withdrawn, he still collects a fee. But his fees for a withdrawn sale are normally limited to $2,500.00 plus his actual costs.
Actual costs for a commissioner sale.
If a sale is withdrawn the commissioner will still collect his costs. The Commissioner’s costs will include:
- The basic cost of the appraisal is about $300 dollars.
- Advertising the sale costs about $400 dollars.
- Reimbursable expenses such as copying and postage about $12 for a sale that is withdrawn.
When a sale is held, the actual fees become much higher than when a sale is withdrawn. Additionally, the commissioner must prepare a deed and do a closing if the sale is completed.
Refunds to the homeowner.
When a house sells, it may sell for more than is owed. In such a case, there is a refund due to the homeowner. When this happens, you must then apply for disbursement. Getting your share normally involves your attorney filing a motion to pay you the equity which is held in the commissioner’s account. This process may take months because creditors have to be paid first before the check is issued.
If you don’t file to be paid this money within about a year, it is then given to the court or the state as unclaimed monies. It then becomes more difficult to get paid after it leaves the commissioner.
The plaintiff must pay a deposit to hold a sale.
To schedule a sale, the plaintiff must pay a deposit to the commissioner to hold a sale which is about 2,500 dollars. The deposit is paid by the plaintiff and held in trust by the commissioners to pay the fees and costs. However, the deposit never covers the commissioner’s minimum costs of holding the sale which runs at least about 3,200-3,300 dollars. If the sale is withdrawn because bankruptcy was filed or for any other reason, the plaintiff still owes the difference which at the minimum would be about 700 to 800 dollars.
The effect of the auction.
When the auction is held the equitable title passes to the winning bidder. Once the auction happens the defendants in the foreclosure lose all rights to the property. Although the judge must still approve a sale, the rights of the homeowner are gone. He cannot file bankruptcy to keep a home after the sale. He no longer owns the property and now he only occupies it. The new owner may not pay the funds and the sale may be withdrawn because the deed has not been paid for.
But if the deed has transferred the title to the new owner only the rights of redemption are left for the debtor to rely on. Filing a Chapter 13 bankruptcy before the sale would have allowed the debtor to catch up on the mortgage or pay off the property taxes. But, filing a Chapter 13 cannot undo the sale. Even filing a Chapter 7 would typically have delayed the sale 6 month or longer.
The right of redemption KRS 426.530.
The right of redemption is found in KRS Section 426.530. Essentially if the purchaser pays less than 66.66% (two-thirds) of the value of the home, the homeowner has six months to buy it back. Under the old code, the homeowner had up to one year to redeem the home. If the purchaser pays over 66% there is no right to redeem the property.
The right of redemption covers not just a homeowner but, any property sold by a court order. You must allow the purchaser to make 10% interest and pay his reasonable costs. But until the six months passes you have a right to redeem the property. The purchaser can technically ask the judge for an order of eviction upon payment but normally the purchaser will not apply for eviction until after he gets the deed.
To purchase the property back, the defendant has to pay for any maintenance or repair of the property by the purchaser. This includes utilities, insurance, property taxes, homeowner association fees, and repairs to conform the property up to local codes. The purchaser does not get his money back for improvements the purchaser makes.
It is best to file a motion to redeem and pay the redemption money to the court clerk. Where the judgment was issued and where the sale occurred are almost always at the same county courthouse. But technically, you can pay it at either courthouse if the lawsuit was transferred from one county to another.
Upon payment of your redemption to the clerk, a new deed is issued by the Commissioner. This also gives you an immediate writ of possession showing you paid the redemption.
Other Related Information
- Kentucky Foreclosure Law Process • Video
- Property Tax Foreclosure Bankruptcy
- How to Get Money Back from a Commissioner Foreclosure Sale
- Kentucky Foreclosure Law Process
- Learn About Louisville Short Sales
If you are thinking about filing bankruptcy, don’t delay because timing is crucial. I am here to help you. So, contact my office right away to start the conversation. Nick C. Thompson, Bankruptcy Lawyer: 502-625-0905.