Question regarding the title of a property from a Tax Sale

[James Zhang]

Hi All,

I purchased my first judicial tax sale last year.  I thought that I did enough research into it but I clearly did not.  So I had to learn the hard way that most title company wont underwrite a title insurance until one year has elapsed since the tax sale.  Anyway, that's not the question here.  

I am trying to resolve an issue on the title commitment.  It looks like the owners of the property passed away prior to the tax sale. so the title company has a line item in the commitment stating that "possible outstanding interest of known and unknown heirs of Owner 1, deceased and known and unknown heirs of Owner 2, deceased pursuant to Tax Sale recorded on ... in record book.... (Note: did not receive sufficient notice of sale)" So the title company is saying that i need to do a quiet title.  I called up the tax revenue department that conducted the sale, and they said that they published the sale in two different newspapers.  I was wondering if that would be enough for this.  And any advice on how to resolve this would be appreciated.

Here is a little additional information.  I tried to speak to the title agent, but they are not interested in helping me resolve this because I owned the property for less than 1 year which means they can't provide title insurance so they wont be able to collect their fees. So there is no incentive.  I am having trouble finding a real estate attorney who specializes in this area.  The few that i called weren't really helpful. 

I would appreciate any help with this.  If anyone knows a good real estate attorney in the Lehigh valley area that specializes in tax sales, that'd be much appreciated

[Kevin Sobilo]

@James Zhang, yes you will likely need to both do a quiet title AND wait 1 year to get title insurance. The issues you describe are VERY common for properties bought at tax sale.

You have one other issue you will have to resolve is estate/inheritance taxes. It sounds like you are in Pennsylvania like I am (Wilkes-Barre/Scranton area here). Since the owner passed away prior to the sale, the estate taxes are payable because on paper the heirs inherited the property before it was sold off. The judicial sale process does not clear this issue up.

You MAY luck out though! The valuation used for the estate/inheritance tax is the sale price which is probably low. However, if the sale happens more than something like 9 months (not 100% sure of the exact time) after the death then the assessed value is used for the valuation. Also, the rate of the tax is based on who inherits. A close relative like a child pays a lower rate than a more distant relative.

So, definitely find a real estate lawyer who can both handle the quiet title and also the estate/inheritance tax issue.