How I learned about purchasing a property with a Tax Deed

Question

Well today has been an experience learning about purchasing a property someone bought as a tax deed. I came across a property that was listed for a crazy price. I inquired about this property and quickly got it under contract in less than an hour this morning. Took the contract over to my local title office and they look it over. The manager informs me that what I hold is a useless piece of paper. I look at them with a puzzled look and they tell me in Florida there is only three ways to close. 1) Have the previous owners sign a quitclaim deed. Which is impossible as I find out they are both deceased. or 2) Have a quiet title search done. Which is also impossible now as they are both deceased and we would have to do our quest through a probate court. and last but not least is 3) wait another year for the tax deed to hit 36 months after being issued. What would you guys do in this situation? Would you pass or try to come to some sort of agreement now on the property? Maybe a lease to purchase?

Tyler Gibson · Answer

@Jeremy Holcomb You will not be able to get a conventional loan without title insurance. You can't get Title insurance without a quiet title action or until the time has elapsed. @Wayne Brooks quoted 4 years but I think it is actually 5 years although I could be wrong. Check with an attorney. Another option is Cleartosell.com (I have not used them) they claim they can do som title searching and provide you with a certificate that some title insurance companies will accept but if they are not able to issue the certificate for any reason you can use them for the quiet title action and any fees paid for the certificate will go towards the cost of the quite title action. The internet research I've done on the cost and process of a quiet title action suggested your costs could be 5k and 3 months of time to complete a quiet title action.

Ryan M. · Answer

@Jeremy Holcomb

The title company doesn't want to help you because they can't sell you title insurance.

If you plan on holding the property past the 4-year mark (from the auction date), I would just accept a quit claim deed from the seller, but have someone look over the tax sale paperwork and title for any issues.

If you plan on flipping it in 30-60 days you can use one of the companies mentioned above. I've used one of those companies before and if you need to sell quickly it's a good way to go.

Or if you have 3-6 months, depending on your local court, you can hire an attorney to file a quiet title action, which is what I mostly do. Many of these tax deed auctions have deceased owners and no heirs to be found, but that just takes little extra time and expense for proper notices.

I would definitely expect a discount since you aren't getting a warranty deed.

Long D. · Answer

Sounds like the "owner" isn't really the owner - at least not without probate.

I recommend you consult with a probate attorney and go over the details with a fine toothed comb.

Wayne Brooks · Answer

@Long D. The seller is the “owner”....he bought it at a tax deed auction.....which the specific tax deed title issues, the death/lack of probate is irrelevant.  Death doesn’t stop a tax deed auction or a foreclosure.

Wayne Brooks · Answer

@Jeremy Holcomb A couple of clarifications:

To get clear title, without a quiet title action, you have to wait 4 years from the issuance of the tax deed.

I don’t believe the death of an owner prevents a quiet title action, just like it doesn’t prevent an foreclosure.

You Can use Tax Tile Services out of Cali to insure your title on this purchase, instead of a quiet title action, after they verify the county tax collector followed proper procedure.....but you’d also need to use them if you resell within the 4 years.

OR

Just buy it with a quit claim deed, maybe you might have an attorney or title company look at the tax collector file to verify proper notices, etc, and wait the 4 years to get clear title.  Unless you need to sell or finance it, it makes no difference....after 4 years it’s free and clear....that’s what I’d do.

Ed Tamayo · Answer

@Jeremy Holcomb

If the prior owners died, as somebody said, you could research if a probate was done, if none is found. you could also open a probate yourself which is something I am doing right now for a

Property I bought in a tax sale.

It might not be worth it if the lot’s value is only 10k but will give you a quicker resolution

Jeremy Holcomb · Answer

Well just to let everyone know. I purchased the 1/2 acre lot with an old mobile home for $4k with the seller holding the note for 2 years for all the issues. We are going to transfer the property via a Quitclaim Deed to my LLC. I am going to wait the time out and use the property to place a newer mobile home or rebuild the existing one to rent. The current value of the land is 11K. It also has existing well, septic, and power in place. I appreciate all the responses and the valuable lessons in today's real estate investing education system.

Long D. · Answer

Thanks for the clarification. I read this too fast and thought the owner was selling the property that was later lost to tax deed sale.

Maybe check with another title company that uses a different underwriter and see if they have another solution.

Clint Shelley · Answer

Wayne is right. These deals are a waiting game. You have to wait the redemption period out if it was done properly or shake the bushes and risk drawing attention. Depending on the upside and how much you have invested, you may want a probate attorney check and see what straws you hold. You also need to make sure the tax notices are coming to you and that you are paying them. This will give you a little color of title, for whatever that is worth.

Ive been in court with a client who had to redeem against a tax sale purchaser. The purchaser lost and sued everyone involved: our people, his people, even the judge and court reporter. He was acting as his own attorney. The sob appealed it all the way to the Alabama supreme Court. It was struck down at every level, but it cost all of us a butt ton of money to defend. I don't even want to see a tax deed anymore.😤 Good luck.

Clint

Wayne Brooks · Answer

@Jeremy Holcomb Good.  BTW, you don’t “file for a warranty deed” after....you can Give a Warranty Deed when you sell, or get standard title insurance after the 4 years, but you won’t “get a new deed”, for your self....but it doesn’t matter in the least.

How I learned about purchasing a property with a Tax Deed

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