Could a new owner interfere with this tax deed sale?

Question

I saw a property that is about to go to auction, and I found a Quit Claim deed from January 2019. In the county records, it says the tax deed sale notice was delivered in 2018. And they still haven't paid off the taxes. My question is if I were to get the winning bid on this property would the new owner have a right to contest the property or try to invalidate the sale by saying they never knew about the tax deed sale?

James Call · Answer

@Angelo Mayorga,

I agree with @Deborah Hardin and @Wayne Brooks.

What state and county are you in?

That is a big deal.  Each state has their own rules and in states where the county makes the rule about the tax sale like Utah, it just depends on each county.

I have purchased tax sale properties in Arkansas like Deborah mentioned.  Once the tax sale is over in that state, you are issued a tax sale deed which is very similar to a quit claim deed.

The previous owner has a redemption period, which I think was something like 90 days.

One HUGE caveat about tax sales is that you are NOT getting clear title to a property in most states I have seen.

I was at a tax sale in Utah recently and there were properties that people were paying full market value for, and they were not aware or considering the fact that these properties had mortgages and liens from HOA's and all kinds of things like that.

I learned this the hard way when I was trying to sell a property I bought in Arkansas at the tax sale and there were enough clouds on the title to create a little lightning storm!

To get a clear title and clear all of the liens was going to cost me more than I paid for the property and about as the property was worth.

I ended up selling it to a developer with a quit claim and I told them that there were a bunch of clouds on the title.  (They bought it anyway, since they didn't realize that I owned it and they had purchased all of the land around me and were clearing it out for some new townhouses.  :) )

Good luck with the tax sales. They can be a lot of fun.  I still own a beautiful place that I bought off a tax sale that is a wonderful spot.

Bruce Lynn · Answer

You might also want to check the validity of Quit Claims.  In Texas Quit Claim does not establish ownership from what I understand.  It only means the person issuing the quit claim says they no longer have an interest.  Our great board certified real estate attorneys here almost never want to use a quit claim.

I'm sure someone could always challenge a sale.....do they win that challenge?  Who knows.  If they do you can tell them to go back to the seller or their title insurance policy to file a claim, but the sale stands and see if they will go away.  To me they may have a claim against the seller, but not against you, and they probably did not get title insurance, or they would have caught and paid the tax lien before the sale.

To me this is not a good defense.  If it was, there might be a lot more quit claims.

Wayne Brooks · Answer

All tax deed procedures are state, and sometimes county specific.

Your state procedures will prevail, but typically no, a transfer After an action has been initiated doesn’t invalidate anything.

However, here, if someone notified the taxing agency of the transfer, they Might reschedule the sale in order to notify the new owner, since they do have “new ownership location” information.

Deborah Hardin · Answer

What state is this property in?

In Arkansas, the new owner would have a right to redeem the property after the tax sale, but simply buying the property before auction is not enough to "invalidate" the tax sale.

However, anyone can try to sue anybody for any reason. That doesn't mean they will win, but it is always a possibility that you would have to deal with them in court.