February 20, 2019

How can a city collect delinquent real property taxes?

KRS 134.420 gives each city a lien on the property assessed for taxes due the city for 11 years following the date when the taxes become delinquent. The lien includes all interest, penalties, fees, commissions, charges, costs, reasonable attorney's fees, and other expenses incurred by reason of the delinquency in payment of the tax bill or in the process of collecting it. The lien also has priority over all other liabilities of the property. Every city with a population less than 20,000 must file notice of delinquent tax liens with the county clerk pursuant to KRS 134.420(6). Tax liens may be enforced in a civil action.

A. Collection by Sheriff - KRS 91A.070(1)

A city may elect, by ordinance, to have all city ad valorem taxes collected by the county sheriff. If the city elects this option, the sheriff will collect delinquent city taxes in the same manner used to collect delinquent county taxes in accordance with KRS 133.220, KRS 133.230, and KRS Chapter 134.

B. Collection by City - KRS 91A.070(2) and (3)

If a city elects to collect its own taxes, it must establish by ordinance the procedures for collection. It may use the following methods for the collection of delinquent taxes:

1.         KRS 91A.070(3) gives the city a lien upon all real and personal property of a taxpayer for the amount of taxes due and for interest and penalties on delinquent taxes. The city may enforce such tax liens by action in the name of the city in circuit court. In the same action, the city may also obtain a personal judgment against the taxpayer for the overdue tax, penalties, interest and costs of the suit.

2.            Any home rule class city or urban county government may utilize the “Mass Foreclosure Act.” It is a streamlined method whereby a city may enforce tax liens by bringing suit against a number of parcels of real estate in one action. KRS 92.810.

3.            A city may join by interlocal agreement with the state and local school districts to create a land bank authority. If the city is unable to obtain the full value of delinquent taxes, plus interest, penalties and costs, at a tax lien foreclosure sale, then the land bank authority is deemed to have acquired the property for the full value of all taxes, interest, penalties and costs, and all delinquent taxes, etc. are extinguished. When the land bank authority later sells or otherwise disposes of the property under its land bank program, the city receives its prorated portion of back taxes, plus costs, from the sale of the property. KRS 65.350-65.375.

C. Publication of Delinquent Taxes

If it wishes, a city may publish a list of uncollected delinquent taxes by listing the names of the delinquent taxpayers and the amount due pursuant to KRS 424.330. The city is authorized to assess an additional fee equal to the prorated cost of publication per taxpayer to the amount of each tax claim published. If the city decides to publish a list of delinquent taxpayers, it must do so in accordance with KRS 424.130(1)(c) by publishing the list once a week for three consecutive weeks, or by publication of a one-half page advertisement providing notice that a list of uncollected delinquent taxes will be published in the following week, followed by publication of the list. The advertisement must include notice that the list is available for inspection at the business address of the city and on an internet website affiliated with the city.

The discussion regarding the collection of delinquent property taxes begins on page 401 of the City Officials Legal Handbook.