Tax sale/Title insurance issue

[Clint Dorris]

I've been offered 2 properties. The seller got them through a tax sale, and has now waited the full 1 year redemption property. However, my closing attorney says, no one will give title insurance, and there is a 3 year statute of limitations to challenge a tax sale.

This creates a loan problem (the plan was to pay cash using a credit line, then get permanent financing), and even if I could get a loan or cash, it creates a huge risk of someone challenging the tax sale. Worse case scenario, someone could successfully challenge the tax sale and be able to redeem the property for tax sale price plus interest plus any taxes. This wouldn't be so bad for the seller who just redeemed them, but it risks me losing all the spread I pay to him. FWIW, he would make a pretty penny, but I would get each property for about 30% less than a typical investor price.

The seller was very up front about the title insurance issue. But, he also said there are ways to post in the paper and eventually get title insurance. My closing attorney is currently in litigation on a similar issue, and says it is too much risk. I plan to seek another opinion, but I thought I'd come here first

Has anyone else dealt with this? Is there a creative way to structure the contract? Am I missing something? Otherwise, it looks like a deal-breaker.

[Account Closed]

Try the folks over at Tax Title Services (dot.com). They offer title insurance for purchases like the one you want to do. It costs more, as it's a higher risk policy. But it shouldn't be a deal breaker.