The Kentucky Legislature has adjourned its legislative session, and several bills passed into law and taking effect July 15, 2016, will impact the real estate industry:
Blighted and Deteriorated Properties – Senate Bill 230 amends a number of statutes related to how local governments handle blighted and deteriorated properties. To encourage redevelopment, the Senate bill has authorized consolidated local governments to establish a tax delinquency diversion program for blighted property under KRS 99.700 to 99.730. Certificates of delinquency for certain property would not be sold for up to five years. The Senate bill also made revisions to various statutes related to the condemnation of blighted and deteriorated properties.
Code Enforcement – House Bill 422 amends a number of statutes related to how local governments handle local code enforcement under KRS 65.8801 to KRS 65.8839. Local governments continue to have a right to a lien for fines, fees, and charges for violations of local code enforcement ordinances, which lien may be superior to those of prior lienholders. The local government must implement a notification system to lienholders in order to obtain lien priority over previously filed liens. The notification system must include an electronic mail registry system and a regularly published list of code violators. The lienholder has the right to abate the violation or pay all fines, fees, and charges for violations within 45 days of notice.
Deeds and Foreclosures – Senate Bill 122 amends KRS 382.110 to provide that grantees at master commissioner judicial sales, pursuant to KRS 426.577, shall record their deeds within five business days of receipt from the master commissioner. House Bill 422 amends KRS 382.135 to provide that a deed shall contain the full name of the grantor and the grantee. At least one title insurer has interpreted “full name” to include the full middle name, not merely a middle initial of the grantor and the grantee. It behooves the General Assembly to clarify what is a “full name.” The Uniform Commercial Code sets forth a carefully considered standard in KRS 355.9-503, and some practitioners are recommending the adoption of a similar standard for deeds. This amendment will start a new discussion between the county clerks and practitioners as to what documents a county clerk will accept for recordation.
Mortgages – Senate Bill 122 has amended a couple of statutes related to mortgages. During the last session, KRS 382.290 was amended to require that a mortgage shall specify and refer to the “next immediate source” of the mortgagor’s title to the property. There was some debate among practitioners as to whether the text – “next immediate source” – meant that the mortgage needed to include the source of title of the mortgagor’s grantor rather than the mortgagor’s source of title. KRS 382.290 was amended to resolve that debate by deleting the term “next.” Going forward, a mortgage should contain a statement that plainly identifies the mortgagor’s source of title. That Senate bill also revised the text of KRS 382.297 from “affidavit of amendment shall not alter the parties of the collateral of a recorded mortgage” to “affidavit of amendment may not change the parties of the collateral of a recorded mortgage.” Also, an affidavit of amendment may now “be used to correct a manifest clerical or typographical error such as spelling, punctuation, or numbering mistakes in typing or printing.” This amendment continues the current back-and-forth between the county clerks and practitioners as to what documents a county clerk will accept for recordation.
Recording Offices – House Bill 16 has repealed 1860 Kentucky Acts Chapter 351. Chapter 351 mandated that Kenton County had to have clerk recording offices in both the City of Covington and its county seat located in the City of Independence. It is our understanding that the Kenton County Clerk intends to continue her office in the City of Covington.