Title Insurance on tax auction properties? Washington State

[John Cournoyer]

Hey Everyone,

I've never posted here but I ran into an interesting scenario I figure someone here has come across in the past. I am primarily a wholesaler in the greater Seattle market and came across a property with a unique situation. The owner of the property purchased the property at a tax foreclosure auction. This is not an IRS foreclosure, but a foreclosure due to state or county property tax delinquency. The owner has the deed to the property but, my title company is telling me they cannot provide title insurance on the property for 3 years due to it being the subject of a tax sale. I guess this has something to do with the redemption period that the former owner or their heirs can object to the sale or contest it somehow. My specific question is about this 3 year period of time. Does everything get magically resolved in 3 years or is there still a clouded title that needs to be resolved?

My title officer is telling me they can insure the title prior to 3 years if it goes through a "quiet title action" which, after talking to a lawyer, sounds like a really cheap and fun thing to do that everyone should try sometime [sarcasm]. 

So that's the setup. To skip to the end, basically I have a partner that I assign things to who is actually comfortable with a lot of risk, and I tied it up so low there's a lot of up-side if I can sort out all the issues with title. My partner is ok with taking title to the property and just keeping it as a rental for 3 years and then trying to sell the property at some point 3 years from now or later. He has cash, so interim financing is not the issue, it's just disposal of the asset is a problem if the title can't be insured. Can anyone explain to me what is materially different about the property 3 years from now?

Second question: There are some judgments on the property. In my experience with trust deed auctions, the judgments always rolled off, but this property is still showing a judgement from the county for code violations. How do I figure out if those are rolled off? I feel like my title officer is not really being that helpful, but i don't really know the right questions to ask since I'm fairly ignorant of the mechanisms of a tax auction. I'm also not the owner of the property so I'm not sure how much anyone will tell me about it if I call. Anybody go through something like this in King County Washington State?

Thanks for any help on this!