Kentucky note holders include city landlords, farm owners and families in the eastern counties who sold a home place on payments. We take the note to several buyers and explain every offer line by line.
Questions a Kentucky file is likely to raise.
The same worksheet comes with every offer.
| Remaining balance | $129,400 |
|---|---|
| Payments left | 168 |
| Buyer’s target yield | 8.0% |
| Purchase price | $115,000 |
| Discount from balance | 11.1% |
| Our fee | shown on every offer |
| Sell the whole note | Sell 60 payments | Keep it | |
|---|---|---|---|
| Cash today | $115,000 | $56,200 | $0 |
| Payments still coming to you | None | 108 payments of $1,140 | 168 payments of $1,140 |
| Total you receive | $115,000 | $179,320 | $191,520 |
| What you give up | Every future payment | The next five years | A lump sum now |
Illustrative example. Totals add up the payments as scheduled; they assume the payer keeps paying and are not adjusted for the value of money over time.
The promissory noteThe mortgage or deed of trustA payment historyThe closing statement from the saleKentucky’s owner-financed notes come from settings that have little in common. In Louisville, Lexington and the Northern Kentucky cities across the river from Cincinnati, such as Covington, Florence and Newport, they come from landlords and homeowners who sold houses to buyers on payments. The side of the river the property stands on decides which state’s practice applies, wherever the holder lives, as with a note on property in any other state. Bowling Green, Owensboro and Paducah add more of the same.
In the Bluegrass and the western part of the state, the security is farmland: pasture, tobacco and grain ground, sometimes a horse property with barns and fencing. In the eastern mountain counties around Pikeville, Hazard and London, bank lending is thinner, so families sell a house, a manufactured home or a piece of the home place directly, with payments made by hand each month. A holder in that region may never have thought of the arrangement as an asset that can be sold.
Years of steady payments are where a Kentucky note can be strongest, and a hand-paid note is where the record is weakest on paper. Receipts, a notebook kept at the time, or bank deposits that match the payment amount all help. Seasoning is the trade term for this history, and a buyer pays more for a note with a long payment history behind it. On a property that is hard to value, the payer’s record is what a buyer leans on.
Kentucky commonly uses the mortgage, recorded with the county clerk. Foreclosure, the legal process for recovering the property after a default, is generally judicial: the note holder files an action and the property is sold under the court’s direction.
Land contracts, also called contracts for deed, are in wide use as well, especially on lower-priced homes. The seller keeps the deed until the payer finishes. Kentucky courts have generally treated these much like mortgages on default, so a seller should not expect to cancel the contract and keep the payments. Before a land contract sale, have a Kentucky attorney confirm how your own contract stands.
A buyer sets the price from the return they need on the money paid to you. With a court process as the expected route under either document, the buyer allows for the time and legal cost it would involve.
When you share the details of your Kentucky note, mention any family transfers in the property’s history so the title question is raised early.
Gather the note and mortgage or the land contract, your deed, any title paperwork for a manufactured home, and your payment receipts. If the payments were made by hand and the receipts are thin, start matching bank deposits to the payment amount now, because that takes longer than finding the documents.
Generally, yes. Kentucky commonly uses mortgages, and foreclosure goes through the courts, with the sale carried out under the court's direction. Buyers factor a court process into the yield they ask for.
Yes. Land contracts are used across Kentucky and can be sold. Kentucky courts have generally treated an installment land contract much like a mortgage when the payer defaults, so a buyer will generally assume a court foreclosure would be needed. A Kentucky attorney can confirm how yours stands.
Often, if the home and the land are sold together and the paperwork shows that. Buyers ask whether the home has been converted to real estate on the county records or still has a separate vehicle-style title. A home without land is weaker security, and fewer buyers will consider it.
Not always, but they have to be dealt with. Land that passed through several generations without probate can leave gaps in the ownership record. A title search will show them, and some can be cured before or at closing.