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134.452 Third-party purchaser of certificate of delinquency -- Fees -- Reasonable
attorneys' litigation fees -- Collection limitations -- Notice to proper owner -Legislative findings.
(1)
Notwithstanding any other provisions of this chapter, a third-party purchaser of a
certificate of delinquency shall be entitled to collect only the following prelitigation
fees:
(a) The amount actually paid for the certificate of delinquency;
(b) Interest as provided in KRS 134.125, calculated on the amount actually paid
to the county clerk from the date the certificate of delinquency was purchased
until paid; and
(c) 1.
Prelitigation attorneys' fees, which may include amounts incurred for
collection efforts and costs related to notification, processing, research,
communication, compliance, legal costs, documentation, and similar
expenses, from the date the third-party purchaser purchases the
certificate of delinquency from the county clerk, to the date on which the
notice required by KRS 134.490(2) is mailed by the third-party
purchaser.
2.
The amount that may be collected by the third-party purchaser as
prelitigation attorneys' fees shall be subject to the following limitations:
a.
i.
If the amount paid for a certificate of delinquency is between
five dollars ($5) and three hundred fifty dollars ($350), actual
reasonable fees incurred up to one hundred percent (100%)
of the amount of the certificate of delinquency, not to exceed
three hundred fifty dollars ($350);
ii. If the amount paid for a certificate of delinquency is between
three hundred fifty-one dollars ($351) and seven hundred
dollars ($700), actual reasonable fees incurred up to eighty
percent (80%) of the amount of the certificate of
delinquency, not to exceed five hundred sixty dollars ($560);
and
iii. If the amount paid for a certificate of delinquency is above
seven hundred one dollars ($701), actual reasonable fees
incurred up to seventy percent (70%) of the amount of the
certificate of delinquency, not to exceed seven hundred
dollars ($700); and
b.
If a third-party purchaser is the owner of more than one (1)
certificate of delinquency against the same taxpayer, actual and
reasonable prelitigation attorneys' fees for all certificates of
delinquency against the same taxpayer shall not exceed one and
one-half (1.5) times the maximum amount permitted in
subdivision a. of this subparagraph for the largest tax bill owed by
the taxpayer.
3.
The amounts allowed by subparagraph 2. of this paragraph shall not
(2)
(3)
(4)
accrue to the account of the delinquent taxpayer, nor be charged by the
third-party purchaser against the delinquent taxpayer all at one (1) time
unless the amount of certificate of delinquency is one hundred seventyfive dollars ($175) or less. The third-party purchaser may accrue to the
account of the delinquent taxpayer, and charge the delinquent taxpayer
an amount equal to the lesser of prelitigation attorney's fees incurred by
the third-party purchaser since the prior notice was sent or one hundred
seventy-five dollars ($175), for each notice sent to the delinquent
taxpayer, provided that:
a.
The total aggregate amount of prelitigation attorneys' fees that may
accrue to the account of the delinquent taxpayer and be charged by
the third-party purchaser against the delinquent taxpayer shall not
exceed the limitations established by paragraph (a) of this
subsection; and
b.
Additional fees shall not accrue to the account of the delinquent
taxpayer or be charged by the third-party purchaser against the
delinquent taxpayer more frequently than every ninety (90) days,
regardless of how many notices the third-party purchaser may
send.
If the delinquent taxpayer and the third-party purchaser enter into a payment
agreement, the third-party purchaser may collect the installment payment processing
fee authorized by KRS 134.490(5).
(a) In addition to the fees established by subsections (1), (2), and (4) of this
section, a third-party purchaser may collect actual, reasonable attorneys' fees
and costs that arise due to the prosecution of collection remedies or the
protection of a certificate of delinquency that is involved in litigation. Fees
and costs permitted under this subsection include fees and costs incurred from
the first day after the notice required by KRS 134.490(2) is sent through the
day any litigation is finally concluded.
(b) For purposes of this subsection:
1.
Actual attorneys' litigation fees up to two thousand dollars ($2,000) may
be reasonable if the fees are based upon documented work performed at
a rate commensurate with hourly rates customarily charged by private
attorneys in that jurisdiction for similar services. A flat rate, without
hours documented for work performed, may be reasonable if the flat fee
is determined to be discounted from the usual and customary rates for
comparable work; and
2.
Any attorneys' litigation fee in excess of two thousand dollars ($2,000)
shall be allowed if authorized by the court upon a finding that the thirdparty purchaser incurred actual attorneys' litigation fees in excess of two
thousand dollars ($2,000) and that those attorneys' litigation fees were
warranted based upon the complexity of the issues presented in the
litigation.
The third-party purchaser may collect administrative fees incurred for preparing,
(5)
(6)
recording, and releasing an assignment of the certificate of delinquency in the
county clerk's office, not to exceed one hundred fifteen dollars ($115).
The General Assembly recognizes that third-party purchasers play an important role
in the delinquent tax collection system, allowing taxing districts to receive needed
funds on a timely basis. The General Assembly has carefully considered the fees
and charges authorized by this section, and has determined that the amounts
established are reasonable based on the costs of collection and fees and charges
incurred in litigation.
A certificate of delinquency owned by a third-party purchaser shall be deemed a
general intangible for the purposes of Article 9 of KRS Chapter 355.
Effective: July 15, 2014
History: Amended 2014 Ky. Acts ch. 71, sec. 6, effective July 15, 2014. -- Amended
2013 Ky. Acts ch. 103, sec. 4, effective June 25, 2013. -- Amended 2012 Ky. Acts
ch. 161, sec. 13, effective April 23, 2012. -- Amended 2009 Ky. Acts ch. 10, sec. 14,
effective January 1, 2010. -- Created 2007 Ky. Acts ch. 14, sec. 1, effective June 26,
2007.
Legislative Research Commission Note (7/15/2014). 2014 Ky. Acts ch. 71, sec. 6,
amended subsection (1) of this statute to correct improper formatting and replace an
incorrect reference to "paragraph (a) of this subsection" with "subdivision a. of this
subparagraph" in what is now subsection (1)(c)2.b. During codification, it was
brought to the attention of the Reviser of Statutes that a second reference to
"paragraph (a)" in subsection (1)(c)3.a. should have been corrected, but was not. The
Reviser determined that the statutory authority necessary to make the change was
lacking, and that citation has not been altered.
Legislative Research Commission Note (4/23/2012). The internal numbering of
subsection (1)(c) of this statute has been modified by the Reviser of Statutes from the
way it appeared in 2012 Ky. Acts ch. 161, sec. 13, under the authority of KRS
7.136(1). The words in the text were not changed.
Legislative Research Commission Note (4/23/2012). 2012 Ky. Acts ch. 161, sec. 15,
provides that this statute, as amended by 2012 Ky. Acts ch. 161, sec. 13, shall apply
to certificates of delinquency purchased on or after the effective date of the Act,
April 23, 2012.
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