PA Tax Sale and title insurance

3 Replies

Planning to look at a property in a town where I have other rentals. Long story short, the current owner recently purchased this property at a tax sale 2 months ago. Seller claims it’s a clean title, a new title search will be done regardless. My issue is that I don’t believe I’ll be able to get title insurance on this place for 12 months after the auction date. So I’ve got 10 months left. That’s 10 months of pretty high risk to me. Granted, this is a cheaper C class property, so it’s not like having 100,000 on the line. But still, I’d hate to purchase it, rehab it and potentially lose it due to the “Right of redemption” or some other law.

So I guess my question is this? Is it true I can’t get title insurance for 12 months?

How risky is not having it in a situation like this? How often are title insurance policies actually used anyway?

Originally posted by @Matt Lord :

Planning to look at a property in a town where I have other rentals. Long story short, the current owner recently purchased this property at a tax sale 2 months ago. Seller claims it’s a clean title, a new title search will be done regardless. My issue is that I don’t believe I’ll be able to get title insurance on this place for 12 months after the auction date. So I’ve got 10 months left. That’s 10 months of pretty high risk to me. Granted, this is a cheaper C class property, so it’s not like having 100,000 on the line. But still, I’d hate to purchase it, rehab it and potentially lose it due to the “Right of redemption” or some other law.

So I guess my question is this? Is it true I can’t get title insurance for 12 months?

How risky is not having it in a situation like this? How often are title insurance policies actually used anyway?

Was this an upset sale or a free and clear judicial sale?  There's a big difference.  In any event, you could do a quiet title to expedite getting title insurance. 

 

Check with a local title company and ask if they'll insure title and if so what would the requirements be.  Buying property w/o title insurance can be very risky and while the statistical risk of having a title claim is relatively low its higher for tax deed property.  Additionally, even though the individual risk is low, if you happen to have a title claim, it's not something you want to deal with on your own.

@Matt Lord

You likely need a quiet-title action. Without it, you could potentially wait a lot longer than just 12 months. 

Buying without title insurance is risky. But the real problem is that if you have a title that a title company won't insurable, you don't have marketable title. If you don't have marketable title, you really can't do much with it. For example, you wouldn't be able to: (1) take out a mortgage on the property; or (2) sell the property at its market value. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.