The Kentucky Court of Appeals stated in the opinion of
Kennedy v. Parks, that the Kentucky Consumer Protection Act (KCPA) is inapplicable when
it comes to real estate transactions.
The facts of the case were as follows: a construction contract for a new
home formed between the plaintiffs and a builder. According to the plaintiffs,
the realtor and the builder had entered into an agreement with the plaintiffs
for the construction of a new home. According to the terms of the agreement,
the realtor and the builder would purchase the properties previously owned
by the plaintiffs upon completion of construction for the new home. However,
before construction on the new home was completed, the builder had filed
In response, the plaintiffs brought an action against the realtor, claiming
the failure to follow through on the promise to purchase the properties
constituted a violation of the KCPA. The trial court disagreed and granted
the defendant’s motion to dismiss, thus rejecting the claim for
KCPA violation. In response, the plaintiffs appealed the decision.
The Kentucky Court of Appeals affirmed the trial court's determination
that the claim should be dismissed. According to the Court of Appeals,
KCPA actions are limited to instances that specifically involve “purchases
or leases” of “goods or services” that are “primarily
for personal, family or household purposes and thereby suffers an ascertainable
loss of money or property, real or personal, as a result of the use .
. . act or practice declared unlawful by KRS 367.170.” Plaintiffs
attempted to circumvent this delineation by claiming that because the
realtor made a promise to purchase the preexisting properties, the agreement
qualified as a “consumer service activity” rather than a real
estate transaction, thus falling under the purview of the KCPA.
However, the Court did not find the plaintiffs’ argument to be convincing.
Relying upon the decision set forth by
Craig v. Keene, the court found that the KCPA could not apply to individual real estate
transactions. The Court further determined that just because the plaintiffs
characterized the promise made by the realtor as “consumer service
activity” did not mean that the promise did, in fact, qualify as such.
Kennedy is one of many decisions that has applied
Craig and determined that when it comes to real estate transactions, the KCPA
does not apply. Furthermore, the case demonstrates that when the subject
of the action relates to real estate, borrowers simply do not possess
valid KCPA claims. While the KCPA may be useful in protecting consumers
in situations involving services or goods, it has no application in cases
where the subject matter involves real property.
more information on this topic, please contact
Jenny Park, Esq. at: