Denied title by title company

Windsor locks, CT · Member since 2017 · 18 posts · 3 votes

I am trying to close on a house and the title company will not issue a title. House was sold on a tax auction online now I’m purchasing the house for cash, my lawyer informed me the title company will not issue a title insurance policy for the property any suggestions on how how I should proceed

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Wayne Brooks

Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes

Well, this is common for tax sale foreclosure properties. Your stat laws will govern...typically there two reasons why you can’t get title insurance for a tax sale property;

1) there is a statutory redemption period in which the previous owner can redeem

2) there is a statutory period of time, usually 1-5 years (4 years here in FL) where the tax sale can be challenged as improper....lack of proper notices, not notified timely, etc.

Typically it takes a Quiet Title action to eliminate #2.

Any real estate attorney should be able to tell you what your state statute is.

Some people will take the risk, purchase without title insurance, that’s up to you.

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Tim McClary
Investor · Bangor, ME · Member since 2017 · 35 posts · 23 votes
7y
I would contact your attorney and do a title search as you would when you buy a property in a conventional sale. After a title search has been completed and any liens dealt with, you should be able to get title insurance.
Its possible the title search could expose issues, but without knowing exactly what's out there no one is going to issue a policy.
Good luck!
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Stanley Bronstein
Attorney, CPA, Broker & Author · Scottsdale, AZ · Member since 2018 · 532 posts · 488 votes
7y
@John Sheridan Obviously there's more to the situation than we know from the details given.
However, my recommendation is that you should ask to purchase a title policy and if you are unable to get clear title such that the title company will issue a policy, then I would NOT buy the property.
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Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
7y
Originally posted by @John Sheridan:
I am trying to close on a house and the title company will not issue a title. House was sold on a tax auction online now I’m purchasing the house for cash, my lawyer informed me the title company will not issue a title insurance policy for the property any suggestions on how how I should proceed
All you can really do is try different title insurance companies.
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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
7y
Well, this is common for tax sale foreclosure properties. Your stat laws will govern...typically there two reasons why you can’t get title insurance for a tax sale property;
1) there is a statutory redemption period in which the previous owner can redeem
2) there is a statutory period of time, usually 1-5 years (4 years here in FL) where the tax sale can be challenged as improper....lack of proper notices, not notified timely, etc.
Typically it takes a Quiet Title action to eliminate #2.
Any real estate attorney should be able to tell you what your state statute is.
Some people will take the risk, purchase without title insurance, that’s up to you.
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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
7y
@John Sheridan if it was a tax deed a quite title action is almost always required before title insurance will be issued. If it was a tax lien foreclosure, then it will generally depend on two things.
1. Was the foreclosure done properly, mainly did the parties get service
2. Which title insurer you use. Many companies simply will not insure (without a quite title action) however that are many that will.
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John Sheridan
OP
Windsor locks, CT · Member since 2017 · 18 posts · 3 votes
7y
@Ned Carey Hi Ned thanks for the reply how long normally does a quote title action take?
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John Sheridan
OP
Windsor locks, CT · Member since 2017 · 18 posts · 3 votes
7y
@John Sheridan Wayne brooks I am using a new attorney and he honestly didn’t seem to know what to do, said he had to call a friend. what is InvIlved wIth a quite tItle actIIn?. Has anyone been in this situation before about how long will it take
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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
7y
@John Sheridan I don't know haw long it takes. I have never had to do one. It will in part depend on how fast the court system in your area works.
A quite title action is very similar to a tax lien foreclosure, in that all parties have to be notified and have time to respond. In my area the actual tax foreclosure takes 6 months to a year. I would guess something similar for a quiet title.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Ned Carey:

@John Sheridan I don't know haw long it takes. I have never had to do one. It will in part depend on how fast the court system in your area works.
A quite title action is very similar to a tax lien foreclosure, in that all parties have to be notified and have time to respond. In my area the actual tax foreclosure takes 6 months to a year. I would guess something similar for a quiet title.
6 months to a year or more..
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Deborah Hardin
Attorney · Cabot, AR · Member since 2016 · 130 posts · 39 votes
7y
A quiet title action usually takes about 6 months around here, but it can drag on longer depending on the court and any surprise answers from defendants.
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Joseph Lopez
Investor · Member since 2018 · 32 posts · 59 votes
7y
@John Sheridan. Contact this company and then you can send me a virtual glass of red wine to thank me later. https://www.taxtitleservices.com/ This is who I use for this exact situation. I buy tax deeds at auction, but I dont resell them. Rather I wait till I am able to refinance later and follow the normal BRRRR strategy. What makes this company unique is that they "Certify" tax sales to make sure they conform to the rigorous requirements that title a company would like to be certain occured so no one can come back later and lay claim to the property through the redemption process. The redemption process will vary from state to state so it's best you talk directly to this company so they can assist you with the state that your property is in. After the certification process, the same company can assist you with title insurance by referring you to one of two sister title companies they work with. Now, there are situations in which a quiet title action will be necessary and they will advise you if that will appear to be your case based upon the tax deed auction process and other factors.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Joseph Lopez:
@John Sheridan. Contact this company and then you can send me a virtual glass of red wine to thank me later.
https://www.taxtitleservices.com/
This is who I use for this exact situation. I buy tax deeds at auction, but I dont resell them. Rather I wait till I am able to refinance later and follow the normal BRRRR strategy.
What makes this company unique is that they "Certify" tax sales to make sure they conform to the rigorous requirements that title a company would like to be certain occured so no one can come back later and lay claim to the property through the redemption process. The redemption process will vary from state to state so it's best you talk directly to this company so they can assist you with the state that your property is in. After the certification process, the same company can assist you with title insurance by referring you to one of two sister title companies they work with. Now, there are situations in which a quiet title action will be necessary and they will advise you if that will appear to be your case based upon the tax deed auction process and other factors.
I tried this company for a deal in SC TAx sale and could not get my lender to use fund based on their title services policy.. so did not work for me.. CA though being a deed state there is little to no risk for them to write this stuff in CA.. not sure why title companies are so risk adverse on this stuff.. They certainly are for one off buyers.. but if your doing volume in a certain county you can get the bigger players to insure you.. at least my Dad did in the 60s to early 80s but he was buying 200 plus a year.. and insuring with the same title company.. although First American still would not touch them for 5 years.
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