Tax Deeds Auction: Title Issue?

[Matt Smith]

I bought a land at a tax deed auction in California. I bought it 8 months ago. The buyer will finance it with a loan.

The deed I received does not seem to have clouds on the Title. Do I have to do a quiet title step or use the service Tax Title Service before I can sell it? Do I have to wait 12 months to make the Title transfer clean and clear with our doing a quiet title or use TTS?

[Rick H.]

Originally posted by @Matt Smith:

I bought a land at a tax deed auction in California. I bought it 8 months ago. The buyer will finance it with a loan.

The deed I received does not seem to have clouds on the Title. Do I have to do a quiet title step or use the service Tax Title Service before I can sell it? Do I have to wait 12 months to make the Title transfer clean and clear with our doing a quiet title or use TTS?

 Good post. 

As you can tell, people who post about what they think they know applies to one state may very well NOT apply in another jurisdiction.

I could give you a lot of title talk about what you may need to be concerned about however, the real question is whether or not a title company will insure for lender or buyer on resale. 

My guess is that you probably do not have marketable title that would satisfy most mainstream title insurers like First Am, Stewart, Chicago or Old Republic. 

I once spoke to the CEO of Title Tax Service and realized that they're just another outlet that takes a chunk of risk (for a fee) and underwrites through one of the major insurers. If I recall right, he was an ATO at another title company before starting his little operation.

I don't think quiet title action would be necessary unless you don't go the TTS route. It's not cheap in CA and cumbersome and lengthy.

In the end, you'll probably end up selling the property without a full title policy by finding either an all-cash buyer or selling for cash plus seller carry back for a large part, as negotiated. Just my opinion.