Title Company = Not responsible for clearing title?

Question

I purchased a home in a tax foreclosure a year and a half ago. I now have a sales contract on the table, and we are currently waiting on title work. I was just informed that there is an issue with title. I called the title company to see what I should do, and they said they are not responsible for clearing title. Um, isn't that what a title company DOES? Now, we're at a stand-still with this contract. I'm going to try to figure it out myself (I used to work at a title company), but the title company is telling me I need to hire an attorney. There's no money in the agreed sale price for that.

My real question is, isn't a title company responsible for clearing title?

Emmett R. McCarthy · Answer

Title insurance is a contract with the title company subject to the exceptions the title company finds and raise as exceptions to title. The title company's job is to find the exceptions (issues with title). It's the seller's job to clear them or make them acceptable to the buyer. If the title company misses any exceptions or insures over them, that is where title claims arise. Sometimes their are easy remedies for exceptions, sometimes not. I suggest you retain an attorney. Frequently  the attorney fees are minimal because the attorney can get a commission from the title company if they are a title agent. Good luck!

Rich Baer · Answer

@Hannah Williams

Hannah,

The title company who presently doing the sale is correct. They normally just pay off liens and mortgages. Anything beyond a simple title fix they normally will not become involved with. You took title through a tax sale. Unless you did all the legal work yourself, the Attorney who did your work in getting the property through the tax sale process is on the hook. The Attorney needs to fix it. Your Buyer won't be able to get title insurance until it is resolved.

Rich Baer, Title Attorney

Jake Thomas · Answer

The title companies job is the provide title insurance and facilitate the closing. Because you bought a property from a tax sale with title issues that is not their responsibility. If it was a simple issue like a past due water bill or small tax bill that can be cleared up but likely not the issues you have. They are right it might be above them to get you issues fixed. What are the issues? I am guessing when you bought it was a quit claim deed and not a special warranty deed? No title insurance on a quit claim deed.

Kim Martin · Answer

I had the same thing happen with a Sherriff Sale home. I kept elevating at the title company, and finally the owner of the company stepped in and helped.

Jon H. · Answer

That is why you hire a title company:)  I know up here in Washington they will not be able to clear title (from the tax foreclosure sale) for about seven years as anybody can claim a legal right to the property within that time frame.  Title & Escrow wouldn't even take my deal because they were unable to insure title.  They said my next best option was to have attorney close the deal.  About $1,400.00.  On the right deal I would take the risk.  The piece of land I was after didn't seem worth it.  Sounds like something to do with the tax sale?

@hannah

@Hannah Williamsundefined