Kentucky at a glance
Checked against the sources cited, 2026-09-19
| Topic | What the law says, and where it says it |
|---|---|
| How foreclosure works here | In Kentucky a mortgage is enforced through a court action. The court enters a judgment ordering the property sold, the property is appraised, and it is sold at a public, advertised sale made under the court's order, normally by the circuit court's master commissioner. KRS 426.005; KRS 426.525; KRS 426.700; KRS 426.560 Show the source textIn an action to enforce a mortgage or lien, judgment may be rendered for the sale of the property and for the recovery of the debt against the defendant personally. |
| Who holds foreclosure surplus | Sale money from a court-ordered sale is held by the master commissioner in an escrow account and must be paid out as the court orders, so any surplus is distributed by order of the circuit court in the foreclosure case. When a property that cannot be divided sells for more than the debt, the statute tells the court to make proper orders for distributing the proceeds. For sales under an execution, the officer must pay any excess to the defendant whose property was sold. KRS 426.685(2); KRS 426.500(2); Ky. Administrative Office of the Courts, Master Commissioner Accounting Policies and Procedures Manual (Version 10, effective Jan. 1, 2025) §100.14 Show the source textthe officer shall sell the whole of it, though it bring more than the sum to be raised, and the court shall make proper orders for the distribution of the proceeds |
| Claim window for foreclosure surplus | We found no Kentucky statute setting a deadline for a former owner to ask the court for surplus. If judicial sale proceeds that the court ordered paid out go unclaimed, the master commissioner must treat them as unclaimed property under KRS Chapter 393A. Property held by a court may be turned over to the State Treasurer one year after it becomes distributable and must be turned over no later than five years after. KRS 393A.040(9); Ky. AOC Master Commissioner Accounting Policies and Procedures Manual (Version 10) §100.14(13) Show the source textmay be paid to the administrator one (1) year after the property becomes distributable, but shall be paid to the administrator no later than five (5) years after the property becomes distributable |
| Tax sale excess proceeds | Kentucky is a tax lien state. Unpaid property tax bills become certificates of delinquency, which county clerks sell each year to third-party purchasers. One year after the taxes became delinquent, the certificate holder may sue to collect or to enforce the tax lien. Any resulting sale is a court-ordered foreclosure sale with an appraisal and the same limited six-month redemption right as a mortgage sale. We found no separate statute on excess proceeds from these sales; as in other court-ordered sales, proceeds are paid out by order of the court. KRS 134.128; KRS 134.546; KRS 426.530; KRS 426.685 Show the source textIf property is sold pursuant to a judgment of foreclosure, it shall be appraised pursuant to the provisions of KRS 426.520, and there shall be a right of redemption as provided in KRS 426.530. |
| Redemption after the sale | Only in one situation. If the court-ordered sale brings less than two-thirds of the property's appraised value, the defendant may redeem within six months from the day of sale by paying the purchase price plus 10% yearly interest and the buyer's reasonable costs. The redemption money is paid to the clerk of the court that ordered the sale. The statute grants no redemption right when the sale brings two-thirds or more of the appraised value. KRS 426.530 Show the source textdoes not bring two-thirds (2/3) of its appraised value, the defendant and his or her representatives may redeem it within six (6) months from the day of sale |
| Rules for recovery companies | An owner's agreement whose primary purpose is to locate or recover property that is presumed abandoned is void if it was signed between the date the property was presumed abandoned and 24 months after it was paid or delivered to the state. Outside that window the agreement is enforceable only if it is in writing, caps the fee at not more than 10% of the value of the property collected, clearly describes the property and the services, is signed by the apparent owner, and states the value of the property before and after the fee. Advertisements and written communications about these services must state the 24-month rule and the 10% limit. The 24-month bar does not apply to an owner's agreement with an attorney to file a claim as to identified property or to contest a denied claim. An owner may name a recovery agent in a signed record under KRS 393A.760. KRS 393.117; KRS 393A.760 Show the source textThe agreement provides that the fee or compensation agreed upon is an amount not more than ten percent (10%) of the value of the property collected |
How surplus funds arise in Kentucky
When a home in Kentucky is sold at a foreclosure sale or a tax sale for more than the debt and the costs of the sale, the money left over is surplus funds, also called excess proceeds or overage. It does not belong to the lender or to the buyer. Liens recorded behind the foreclosed debt are paid first, and what remains belongs to the former owner or to the owner's heirs. Read surplus funds explained for the general rules and liens and competing claims for the order of payment.
How a claim moves in Kentucky
We confirm the sale figures in the public record, identify which office in Kentucky is holding the money, and prepare and file the claim the way that office requires, advancing the costs. Because we bring the whole record with us, the claim does not stall on a missing document, a competing name or a missed date. See how to qualify for what we handle and what you provide. Notices about surplus are usually mailed to the last address on record, which is often the home that was sold, so do not wait for a letter. In Kentucky that program is the Kentucky State Treasury Unclaimed Property Division (the State Treasurer administers Kentucky's Unclaimed Property Fund).
If the owner has died
The right to the money belongs to the estate. Depending on the size of the estate, Kentucky law may allow a simplified procedure, or a probate court may need to appoint a personal representative. See estate and heir recovery and probate assistance.
Working with a recovery company in Kentucky
Kentucky regulates this kind of service. An owner's agreement whose primary purpose is to locate or recover property that is presumed abandoned is void if it was signed between the date the property was presumed abandoned and 24 months after it was paid or delivered to the state. Outside that window the agreement is enforceable only if it is in writing, caps the fee at not more than 10% of the value of the property collected, clearly describes the property and the services, is signed by the apparent owner, and states the value of the property before and after the fee. Advertisements and written communications about these services must state the 24-month rule and the 10% limit. The 24-month bar does not apply to an owner's agreement with an attorney to file a claim as to identified property or to contest a denied claim. An owner may name a recovery agent in a signed record under KRS 393A.760. (KRS 393.117; KRS 393A.760)
Any agreement you sign, with us or with anyone else, has to follow that rule.
No out-of-pocket expense. Our only payment is a completion fee taken from the surplus once it is recovered. Where your state requires a licensed attorney for a court or probate filing, a licensed attorney handles it, and you still pay nothing out of pocket. Before you sign with anyone, read what a surplus funds scam looks like.
Questions about surplus funds in Kentucky
Enough to prove who you are and how you held the property: identification, the deeds, any notice you received, and, if the owner has died, the estate paperwork. We do the rest for Kentucky, from locating the funds to filing the claim.
Sale money from a court-ordered sale is held by the master commissioner in an escrow account and must be paid out as the court orders, so any surplus is distributed by order of the circuit court in the foreclosure case. When a property that cannot be divided sells for more than the debt, the statute tells the court to make proper orders for distributing the proceeds. For sales under an execution, the officer must pay any excess to the defendant whose property was sold.
No out-of-pocket expense. We advance the costs and are paid a completion fee from the surplus only after it is recovered. Where a court or probate filing requires a licensed attorney, a licensed attorney handles it.