All Forum Posts by: Lee Macky

If I have a Special warranty deed can I or should I convert to regular tax deed? Will a bank lend on a special warranty deed ?

@Conrad Meier, this is not uncommon with a tax sale property. 

The process is VERY messy and so the prior owner or other interested parties could have cause to reverse the sale. For example your state's law might require a prior owner who resided in the property to be notified in person but they may not have been able to locate and serve them notice or an interested party may have been notified at the wrong address. These issues create clouds on the title.

Many title companies won't issue title insurance for a period of time after a tax sale before of the liklihood of something like this popping up, sometimes even after a quiet title action is done.

So, the title insurance company the buyer is using wants either the prior owner to sign a quit claim deed so they know this won't be an issue or for you to do a quiet title action so that owner has only that one last chance to come forward settling the issue.  That would be very typical work an investor would do when they buy a tax sale property.

One other suggestion you might take is to suggest they use the title company you got insured through because apparently they are more relaxed with their requirements.

I would also discuss with your lawyer about providing a General Warranty deed. In my state a Special Warranty deed is most common. A General Warranty deed means that buyer can hold YOU legally responsible for any title issues later on even if the issue happened BEFORE you owned the property. With a Special Warranty deed they can only hold you accountable for title issues that happened during your ownership of the property. I'm not sure what is the common practice in your state, so I would discuss with a lawyer.