Auction, Title Insurance, and Quit Claim Deed Inquiries

5 Replies

Hi everyone, I am new to Bigger Pockets. I have a few questions regarding a situation my father is in as he is a real estate investor. Basically in 2017, he bought a property at a city auction but long story short the person he was working with did not do a proper title search and my father found out that the property he bought to renovate could not be sold until approximately a year later (February 14, 2018).

Now the 14th has passed and my father had a buyer and a deal set, but it turns out that the property does not have a clear title. The previous owner moved to North Carolina and supposedly was not notified that the property was I guess seized. The previous owner has not payed taxes nor a mortgage on this property for two years. So my father's realtor reached out to previous owner who said he will not sign the deed to give away the property without getting 25k in return. We will not do this. So my father reached out to a lawyer who wants to do a quit claim deed but is asking for $4000 to advertise in this guy's city. I believe the advertisement is to let the previous owner know that his property is being given away. I don't see why this is necessary as the previous owner is well aware.

My father found a title company that was willing to work past this in some capacity, but will not give title insurance as there is no clear title and do not want to give insurance in the event that previous owner wants to challenge in court that he was not notified about the property being seized. Does this mean he has the right to come and claim it? I mean my dad bought the house from the city and we completely renovated it. I don't see if he hasn't been paying for anything how he can still possibly claim the house. Isn't this on the city who sold the property?

Right now, my father is in a bind because he has this great property to sell and the options presented aren't great, especially as the current buyers want seller's assist as well. Has anyone dealt with something similar to this issue or know where I can begin seeking counsel for this matter? Any feedback you can give would be greatly appreciated.

@Kwame Lewis That's a good summary of a bad situation. The best route might be to ask two different NC R/E attorneys for their recommendations. Try Jason Isley, Travis Barkley, Sam Weathers, Kathie Russell, John Anderson, John South, Gene Tatum, Wayne Roper (I know your next question might be a list of recommendations.....).

I believe what the attorney is suggesting is a Quiet Title suit.....not a Quit Claim Deed. A QT action is usually required for a tax auction property.....should have been done from the get go.

The attorney will fix it. I had a similar situation in Arkansas. We offered them the 4 grand to sign. It was returned to sender. More than likely they wouldn’t fight for it then they won’t now but lawyer fees ran about 4K. We did a quiet tithe. Took about 6 months. 

Hi everyone,

Thanks for the advice. I received more information on the situation. Please let me know your thoughts

Upset sale from the city of Allentown last September 2017. Property buyers are responsible for any leans on the property. Nothing else .

After finishing the fixes on his property. He cannot the sell the property even though he resolved the leans on the property .

He just can’t sell the house without title insurance because buyer needs the loan from title insurance to buy the house . In order to get title insurance dad needs the quick claim deed or acquired title In order to get title insurance .Because the previous owner of the house will not sign the quick claim deed, basically previous owner relinquishes all claims to the house .the title company won’t issue title insurance . Also the acquired title is given by a lawyer , it can cost $3000 minimum upfront to have them on retainer . Without title insurance or acquired title the buyer cannot obtain a loan from the bank to purchase the house. 

Thanks for the advice everyone.

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