Tax sale houses. Learn from my most recent trouble :)

[Greg Carrier]

So we participate in tax sales.  We have done several states but right now spend 99% of our time in Indiana and Michigan.  As you may or may not know, when you buy a property on tax sale, you do not get a warranted deed.  You get a tax deed which is really like a quit claim deed (I am not a lawyer there could be some subtle differences).  Without a warranted deed, you can generally not get title insurance and consequently cannot sell the house to someone getting a loan for the property.  In order to rectify that, you need to quiet the title.  We have done so both in Michigan and in Indiana.  In all of our Indiana retail sales we have used attorneys.  We have been aware that some title companies also offer this service and have used one successfully in Michigan to quiet a title.  Here is where one of our current sales went off the rails.  We chose a national title company to quiet the title.  When we use attorneys they follow the rule of Indiana law which requires that all people with a possible interest in the property be contacted.  How do they contact those people?  The requirement is to see what is recorded at the local recorders office and send letters to those people and to also post ads in the paper of record for the area.  What the title company chose to do is hunt down the previous owner who had abandoned the property and moved to another state.  The house had $28,000 owed on taxes and penalties on a house that only had an annual tax bill of $1,340.00.  The roof had failed and the house had been empty for years.  But wouldn't you know it, when the overzealous title company found the old owner, he saw a way to make some money so has now announced that he will be suing us and the county for "wrongfully taking his house."  Here is the thing.  the title company promised a 15 day quiet and has made a mess of this.  We will win the suit, but it could take months, and the buyer who has already had appliances installed will have to get them out and continue renting until this is ironed out.  I share some of the blame for presuming the title company would follow Indiana law and for not having this done prior to listing.  I am sure by the Fall this will be in the rearview mirror.  I am posting it just to give a heads up to the rest of you so you might avoid this in your own businesses.