Tax Deed Purchase - No Title Insurance Available - Financing?

[Zarine D.]

There are two parcels I want to bid on for at a tax deed sale, but there is a major issue. In the past few years all of our title companies in Hawaii have changed their policies where they will not issue any policies for a minimum of 20 years. 

This applies even to parcels where the purchaser takes possession and clears the title in the first few years (it's not a seasoning period, it's just a flat amount of time). 

Both of these parcels would require a substantial amount of cash for development and new construction (one is a multifamily and zoned for 6 plex) and the other I would subdivide into 3 parcels, build a SFR on each, and sell.

I would need constructions financing of approximately 1.5 - 2 MM for each parcel. Ideally I would like to refinance the 6-plex into a commercial loan with terms favorable to holding for the long term. 

Do private/hard money lenders ever loan without a lender's title policy? Commercial lenders? What kind of terms, if so? 

Has anyone had experience with sale via seller financing when title insurance can't be issued?  Success with buyers using cross-collateral loans? These are two very desirable parcels and there are many cash buyers in our area. I don't know how seriously buyers will take this issue if they don't need conventional financing and I can show proof of clear title. 

Experience and advice welcomed- thanks!

[Don Konipol]

@Zarine D.

I know of no lenders, conventional or HML, that will lend without a title policy.

The answer to your dilemma is to initiate a court action for quiet title. Once the appropriate county judge signs an order affirming title in your name, any title company will issue title.