The Kentucky General Assembly is considering a bill that would establish the priority for purchase money deeds of trust and mortgages in certain instances and amending various statutes to conform. The bill, HB 431, is being sponsored by Reps. Joseph Fischer, R-Ft. Thomas ; and Jason Petrie, R-Elkton.
The bill defines “purchase money deed of trust or mortgage” as “a deed of trust or mortgage given to a vendor of the real property or to a third-party lender to the extent that the proceeds of the loan are used to:
- Acquire title to the real property; or
- Construct improvements on the real property if the deed of trust or mortgage is given as part of the same transaction in which title is acquired.”
Under the proposed legislation, a purchase money deed of trust or mortgage, whether or not recorded, would have priority over any mortgage, lien or other claim that attaches to the real property, but is created by or arises against the purchase-mortgagor prior to the purchase-mortgagor’s acquisition of title to the real property.
A purchase money deed of trust or mortgage given to a vendor of real property, in the absence of a contrary intent of the parties to it, and subject to the operation of Sections 1 and 2 of the bill, would have priority over a purchase money deed of trust or mortgage on that real property given to a person who is not its vendor.