Kentucky · owner financing
Kentucky owner financing, explained.
A plain-English guide to owner financing (also called seller financing) in Kentucky — statute, recording, default remedies, interest caps, and where deals actually happen.
KRS Ch. 382 (recording); KRS Ch. 426 (foreclosure); common law for CFDs
Recording with county Clerk permitted under KRS § 382.080; not strictly mandated but unrecorded contracts subordinate to BFPs.
Hybrid. Kentucky case law treats CFDs as equitable mortgages requiring foreclosure where buyer has substantial equity (Sebastian v. Floyd, 585 S.W.2d 381 (Ky. 1979)). Forfeiture remedies disfavored when buyer has paid significant amounts.
Is owner financing legal in Kentucky?
Kentucky recognizes 'land contracts' / 'contracts for deed' as common-law instruments for seller financing.
How do you record a owner financing agreement in Kentucky?
Recording with county Clerk permitted under KRS § 382.080; not strictly mandated but unrecorded contracts subordinate to BFPs.
What happens if the buyer defaults?
Hybrid. Kentucky case law treats CFDs as equitable mortgages requiring foreclosure where buyer has substantial equity (Sebastian v. Floyd, 585 S.W.2d 381 (Ky. 1979)). Forfeiture remedies disfavored when buyer has paid significant amounts.
What is the maximum interest rate?
8% if no written agreement; written contracts up to 4% above the Federal Reserve discount rate or 19%, whichever is less (KRS § 360.010); various exemptions.
What disclosures are required?
Kentucky Seller's Disclosure of Conditions required for 1-4 family residential under KRS § 324.360; lead-based paint (federal).
Who's protected — buyer vs. seller
Buyer protections
Sebastian v. Floyd doctrine requires foreclosure when buyer has substantial equity; redemption rights; equitable interest recognized.
Seller protections
Forfeiture available pre-equity-accumulation; ejectment; retention of payments; foreclosure with deficiency available.
Where in the state do these deals happen?
Eastern Kentucky (Appalachia) rural land; horse farms in Bluegrass region; small-town residential.
Kentucky cities
Per-city market notes for owner financing buyers and sellers.
Notable case law
Sebastian v. Floyd, 585 S.W.2d 381 (Ky. 1979); Slaven v. Slaven, 540 S.W.2d 864 (Ky. 1976).
Looking at a Kentucky deal?
Send the parcel and the terms — we'll walk through whether owner financing fits, how to record it, and what the cure period looks like if things go sideways.
Talk to WyattEducational content only. Statute citations are public-record research, not legal advice. Kentucky contracts and remedies are fact-specific — consult a licensed Kentucky real-estate attorney before signing anything.