How to Sell a Tax Deed Property With No Quiet Title Action
A tax deed property is one sold at a public auction that has been repossessed by a governmental entity as a result of unpaid taxes. It can occur due to delinquent state or county property taxes or federal income taxes. For real estate investors, tax deed properties present a lucrative opportunity. After buying a tax deed property, investors want to ensure there are no other claims to the property, using a court procedure called quiet title action. However, the process is costly and time-consuming, so investors may want to know how to sell a tax deed property with no quiet title action.
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Instructions
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Find out whether your state issues tax deeds or tax-lien certificates before investing in a tax deed property. Some states offer both, but they do not convey the same type of ownership interest. A tax deed either wholly or conditionally transfers title of the property to you as the winning bidder, whereas a tax-lien certificate does not convey ownership, but rather it creates a first-priority lien, giving you the right to foreclose on the owner.
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Research your state’s redemption statutes. Some states allow the tax-delinquent owner to redeem or reclaim the property by paying all back taxes, accrued interest and other expenses within a specified time frame. As the buyer of the tax deed property, you pay all outstanding tax and expenses, so the owner can only redeem the property by repaying you.
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Remove any “clouds” on the property title. It is prudent for real estate investors, or any buyer of property for that matter, to obtain title insurance prior to selling the property to protect against financial losses due to a defect in the property title. Most title insurance firms will not provide insurance on a clouded (defective or bad) title without the benefit of a quiet title action.
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Consult with an experienced real estate attorney about all available options. A quiet title action lawsuit, also called a suit to remove a cloud, can require a lot of time and money. A quiet title action can establish ownership of the property, and often it can reveal other claims against the property and help you get a clear and marketable title to move forward with the sale of the property.
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Contact a title service firm. Companies such as Tax Title Services offer alternatives to quiet title action lawsuits to help you sell a tax deed property with no quiet title action but with the title insurance you need. They provide a Foreclosure Due Process Certification, which certifies the accuracy and completeness of an insurable title search and any curative work needed, often in less time and at less cost.
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Market your tax deed property. Once a buyer signs a purchase agreement, the title service company forwards the original tax lien due process certification and insurable title search to the new title underwriter.
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