Best deal on a Tax Deed Property?

27 Replies

Bought a 4/3 block house for $ 15,765,

Went to the clerk's office and bought it,registered the deed, and called my Realtor.

Drove toward the house, stopped at Home Depot and bought new locksets.

Met Realtor at the house... drilled the locks for access, and as I was changing locks, she took pictures. We did a calculation of sales price(cost+ sales commissions+ profit) so she knew where to list it.

She took a yard sign out of her pickup and put it at the end of the driveway, got out a lawn chair and sat under the trees in the front yard.

Third person to look at it that day (neighbor) bought it for $ 27,999 three hours later.

Originally posted by @John Rogers :

Quiet Title wasn't necessary... this was purchased on the county website as a pure, clear title, tax deed sale.

 That's not how that works.   A tax deed is a tax deed, not a warranty deed.   In Florida for you to resell with a warranty deed you must wait 4 years or do a quiet title action.  You can quit claim the property but it will come with no title insurance or guarantee of it clear title.   Most buyers want a warranty deed.   

As a Brokerage, I do a lot of business with a HUD approved Title Company.

When I research the upcoming tax deed sale, I have them do a quick title/lien search on the ones I will bid on.

@John Rogers @Wayne Brooks @Patrick L. @Christine T. @Kris Baldwin @Account Closed

There is confusion in the above posts.  Tax Deeds are NOT warranty deeds as stated above.  There can be NO liens or mortgages on the property and you still don't have a clear title. The Tax Deeds are like a Quit Claim Deeds and come with NO WARRANTY.  Just because there are no mortgages or liens on the property does not mean clear title.

You can get a warranty deed with liens, like in the case of subject 2.

And you can get  a quit claim deed or other NON-Warranty deed like a Tax Deed with ot without liens and it still is not clear title.

Getting Title Insurance can cure the UNCLEAR status of a Tax Deed  depending what the exceptions are on the title policy. 

Not having clear title will prevent refinancing with a bank, credit union or institutional financing.  Also any buyer looking to get institutional financing won't be able to buy your Tax Deed property unless the title has been cleared.

I've written before about UNRECORDED liens, that don't show up on a title search. like Mechanics Liens, Welfare Liens, Nursing Home Liens, etc.  Any of those would make a title UNCLEAR.

A friend of mine is from another country where property rights are not like they are here in USA.  They have gone to Tax Sales that wipe out all liens (of record) and I've tried to explain the warranty/clear title issues but they still don't understand the difference between  "clear title" and "no liens" recorded on the property.

@David Krulac I guess what im asking is then how did @John Rogers buy and register a tax deed in a day? Also, if you have a tax deed, does that mean that you are primary owner? I guess I need to be educated A LOT more in what exactly a Tax deed is. I am very interested in getting into the Tax Deed/Lien business.

@David Krulac Said it better than I did, Florida specific.....no liens doesn't equate to "clear and marketable" title. Until a Successful quiet title action(not all are successful), or a 4 year wait, the tax deed process is a cloud on the title, since the sale can be challenged, perhaps not successfully, but still challenged.  And yes you can sell during this period, but the buyer is getting a clouded title whether they realize it or not.

Originally posted by @Account Closed :

@David Krulac I guess what im asking is then how did @John Rogers buy and register a tax deed in a day? Also, if you have a tax deed, does that mean that you are primary owner? I guess I need to be educated A LOT more in what exactly a Tax deed is. I am very interested in getting into the Tax Deed/Lien business.

 In Florida when you win the auction you have 24 hours to pay in full.   Once you pay a deed can be issued and at the latest will be issued the following day.   

The issue is you do not have "marketable title." so you cannot sell the property through a standard closing.   You can quit claim it with no title insurance or guarantee of clear title.   You can do a quiet title action.  You can use a company like Cleartosell.com which will certify the tax deed (for around $2700 and 3 weeks)  and certain underwriters will be willing to insure the title based on their certification.  

As far as the process described by John Rodgers I do not know of a single underwriter in Florida that will issue a title policy on a tax deed property inside of 4 years that has not had quiet title/cleartosell certification. If you found a title company with an underwriter willing to do those please let me know, I'd love to save $3k/property and avoid quiet title.  

@Wayne Brooks

You got it, a NON clear title has a cloud, that may or may not be a lien.  I bought a property once that had an unrecorded Municipal Sidewalk Lien.  fortunately I had Title Insurance, so they paid the thousands of costs for the curb and sidewalk.

Here in PA, you have to wait 21 years to clear a title without a Quiet Title Action lawsuit.  The time period varies by state law.

@Account Closed At the Tax Sales that I have been to, not in FL., it takes 1 to 3 months to actually get the physical deed from the county.  During that time between buying at the Tax Sale and actually getting the Deed, you're sort of in a limbo.  you paid for the property in full but the deed isn't recorded in the courthouse.  If the house is abandoned, some bidders will enter the property.  If the property is occupied you may need to file an eviction or ejectment to get possession of the property. 

@Wayne Brooks and @David Krulac What exactly is a quiet deed/auction? If indeed the process is to wait four years until you have a clearer title, then would it be better to buy and hold these properties as opposed to flipping them? It seems like flipping would be difficult because the best type of deed you can give is a quit claim deed, which some people may not mind but most would. Am I right or am I way off?

To clear up the terminology:

Quit Claim Deed, no warranties of clear title given

Quiet Title Action, a legal procedure in front of a judge, involving notifying all potential lien holders on a property.  For tax deeds, necessary to avoid the four year wait,. It's essentially a verification proceeding to establish the tax deed process was done correctly.  Takes about  6 mo.s, $2,000.    In other cases, to clear up recording mistakes/errors, cases of fraud, opposing claims, etc. 

There are attorneys that specialize in quiet title for tax deed sales like Hicks/Knight from Tampa.

They can get one done in around 60 days, then you wait for the appeal, and at the end of the wait period you have clear title.

In my example, I sold to a neighbor who was buying the house for his daughter on a quit claim deed, fully disclosed, and he did the quiet title.

So just to clarify, is there any problem with purchasing a tax deed for a vacant property at a tax deed sale, and then turning around and selling it to a homeowner next to, or near the property?

@Jake Ebanks

If the buyer will accept a Quit Claim Deed without warranty, doesn't care if the title is clouded and not clear, and is not getting institutional financial or  title insurance, THEN you're good to go.

I have gotten a couple of 2 bedroom 1 bath houses for as little as $1200.00 each.

Both had a tenant that quickly became my tenant.

One house has central HVAC in it.

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