Advice on nature of a transaction

[Christian Lincoln]

The property was sold at auction by city for cost of the back taxes due to the current seller, two years ago, ( a tax/forclosure guy).  He says he doesn't have time for it, dumping it out of his portfolio, willing to sell it for his cut (3,500) acting as a wholesaler i guess, and for the cost of the back taxes owed the city, now at 11,000 dollars.  He says it will require an Article 15 proceeding but this isn't a big deal, he does it it all the time.

My attorney and title company don't seem to understand this or don't like this or don't seem inspired to want to move forward with something like this (title company says we can't really insure this without an action to clear title), I think mostly because they seem unfamiliar with it.  I've ordered the title search anyway. Can someone walk me through the pitfalls of this, or maybe how something like this happens?  Can I still make an offer contingent of clear title and just pay the taxes with city (if this is the only obstacle on title as he says) and then proceed to close?  

Title company says this:  "Being that this is a tax sale property I will most likely not be able to insure without an action to clear title. I presume you will be taking a deed from the holder of the tax sale certificate? If you could get a deed from the person who lost the property that may make it insurable also."

[Matt Devincenzo]

What your title company is saying is the norm for tax sale properties. Do a search here on BP for "tax deed" "quiet title action" "title tax insurance"...

The issue is almost no title company will insure title over a tax sale, until after a quiet title has been completed. Basically there is a possibility that the tax foreclosure failed to notify all parties involved, so in order for them to insure it they require a separate judicial case (quiet title) to have a judgement to that effect. 

In a recent thread someone posted info for a tax title company that will provide title insurance. Basically they themselves go through similar requirements as a quiet title action and then insure. Once one title company has insured then others will. But for your portion of the purchase you will not be getting clear title, unless the seller is willing to do the quiet title prior to close, which if he was then he would have marketable title so why not sell it at that point. The quiet title costs vary by state but in FL it is about $4K, and the tax title service is $2500 or so.

Sounds like if you want the deal you have to take the risk...which is the same risk that every tax deed sale purchaser takes at auction.