Key Takeaways
- Kentucky closings are typically conducted by attorneys or title companies
- The Closing Disclosure must be provided to buyers at least 3 business days before closing
- Kentucky uses title insurance to protect against defects in title
- Property taxes are prorated between buyer and seller as of the closing date
- Recording the deed immediately after closing is essential to protect the buyer's interests
Last updated: January 2026
Kentucky Closing Procedures
The closing (also called settlement) is the final step in a real estate transaction where ownership transfers from seller to buyer.
Closing Process Overview
Who Conducts Closings
| Party | Role |
|---|---|
| Title company | Common, provides title insurance |
| Real estate attorney | Common in Kentucky |
| Escrow company | May handle funds and documents |
| Lender's closing agent | For financed transactions |
Timeline
| Event | Timing |
|---|---|
| Clear to close | Lender approves final documents |
| Closing Disclosure | At least 3 days before closing |
| Final walkthrough | Usually day of or day before closing |
| Closing | Scheduled date |
| Recording | Same day or next business day |
Required Closing Documents
Buyer Documents
| Document | Purpose |
|---|---|
| Closing Disclosure | Itemizes costs and terms |
| Promissory note | Buyer's promise to repay loan |
| Deed of trust/mortgage | Security instrument |
| Title insurance commitment | Commitment to insure title |
Seller Documents
| Document | Purpose |
|---|---|
| Deed | Transfers ownership to buyer |
| Seller's affidavit | Confirms no liens, possession issues |
| Bill of sale | Transfers personal property |
| Payoff statements | Shows amounts owed to pay off liens |
Closing Disclosure (CD)
The Closing Disclosure replaced the HUD-1 Settlement Statement for most transactions:
| Section | Content |
|---|---|
| Loan terms | Interest rate, monthly payment |
| Projected payments | Principal, interest, taxes, insurance |
| Closing costs | Itemized buyer and seller costs |
| Cash to close | Total buyer needs at closing |
Timing Requirement
| Rule | Requirement |
|---|---|
| Delivery | At least 3 business days before closing |
| Changes | Certain changes require new 3-day period |
| Review | Buyer should review carefully |
Prorations
What Gets Prorated
| Item | How Prorated |
|---|---|
| Property taxes | Based on due date and payment status |
| HOA dues | Based on payment schedule |
| Rent (if investment) | Based on collection |
| Interest | Per diem from closing date |
Property Tax Proration
Kentucky property taxes are paid in arrears (after the tax year):
| Tax Year | When Due |
|---|---|
| Current year taxes | Due following year |
| Example: 2026 taxes | Due in 2027 |
Calculating Prorations
| Method | Description |
|---|---|
| 365-day method | Actual days in year |
| 360-day method | 30 days per month |
| Debit to seller | Seller pays for days owned |
| Credit to buyer | Buyer receives for seller's days |
Title Insurance
Types of Title Insurance
| Type | Protects |
|---|---|
| Owner's policy | Buyer's interest |
| Lender's policy | Lender's interest |
What Title Insurance Covers
| Covered | Not Covered |
|---|---|
| Defects in title | Known defects disclosed |
| Undisclosed liens | Defects discovered after issue |
| Forgery | Government action (eminent domain) |
| Recording errors | Unrecorded easements |
Recording the Deed
Importance of Recording
| Why Record | Effect |
|---|---|
| Constructive notice | World is on notice of ownership |
| Priority | First recorded has priority |
| Protection | Against subsequent buyers |
Kentucky Recording Requirements
| Requirement | Details |
|---|---|
| Where to record | County clerk where property located |
| Fees | Varies by county |
| Transfer tax | $0.50 per $500 of value |
| Timing | As soon as possible after closing |
Transfer Tax
Kentucky imposes a real estate transfer tax:
| Tax | Amount |
|---|---|
| State transfer tax | $0.50 per $500 of consideration |
| Who pays | Typically seller, but negotiable |
| Exemptions | Certain transfers exempt |
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Test Your Knowledge
How many business days before closing must the Closing Disclosure be provided to the buyer?
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Test Your Knowledge
What is Kentucky's real estate transfer tax rate?
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