KRS 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
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 seventy-five 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
subparagraph 2.a. of this paragraph; 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.
(2) 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).
(3) (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 third-party 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.
(4) The third-party purchaser may collect administrative fees incurred for
preparing, recording, and releasing an assignment of the certificate of
delinquency in the county clerk's office, not to exceed one hundred fifteen
dollars ($115).
(5) 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.
(6) 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.