Is a Quiet Title Action needed for Title Insurance

[Abdenour Achab]

Let's say I acquire a house in Arizona through foreclosure of a tax lien certificate. Let's say the foreclosure was on the deadbeat homeowner who was served in person, and on a private deed of trust holder who was served by publication.

There is always the risk that the foreclosed deed of trust owner will wake up one day from a deep coma, come out of the woodwork, and sue me, or whoever I sell the house to, alleging defective service and, therefore, trying to reinstate the deed of trust and/or re attach that deed of trust to the house.

The standard advice I have been reading about is file a Quiet Title Action. But what does a Quiet Title Action prove in Arizona that a Tax Lien Foreclosure conducted by a competent lawyer doesn't already prove regarding someone who cannot easily be found. In both cases, a lawyer and/or his paralegal and/or their skip tracer try to locate the deed of trust holder and, when they fail to do so, serve him by publication. After a Quiet Title Action, the formerly comatose Deed of Trust holder can still come out of the woodwork, claim defective service, and risks reinstating the dead of trust. Same probability of succeeding as against a tax lien foreclosure.

I asked GROK the above question after it took recommended a Quiet Title Action. GROK agreed with me that a Quiet Title Action doesn't really prove anything beyond a competently done Tax Lien Foreclosure. But GROK said that, regardless, title insurance companies are more likely to insure title after a Quiet Title Action.

If I acquire a house in Arizona through a foreclosure on a tax lien certificate where the private deed of trust holder was served by publication, and keep that house for a couple of years during which no one shows up contesting any aspect of the foreclosure, is there, in Arizona, a title company that will insure the title for a prospective buyer of the house? Potentially charging more (as in twice or so the going rate) to cover the extra risk?

[Jay Hinrichs]

Quote from @Eric James:

This is something a lot of people newbies don't realize about tax sales in TX too. They think they can resell a tax sale property immediately after the 6 month redemption period for non homestead properties. You can, technically, sell it, but title companies won't insure it. You generally have to wait 2-3 years, though for a while I had one that would insure after 1 year.

A lot of this depends on your realtionship and business you bring a title company.. Waaay back in the day I am talking 70s early 80s our family business would buy about 100 plus properties a year in one county in CA at tax sale.. there were 3 title companies in that county we ran all our activity through one when in a good year we might have about 500 total transactions as such they would insure our tax sale properties the moment we recorded the Tax collector deed so usually within 30 to 45 days of the actual sale.. The others would not touch them for 5 yearss.  If your a one off investor your not going to pull any weight generally speaking with a title and escrow company volume has its perks.