Title and/or Deed Issues Attempting To Sell Property Recently Purchased

Member since 2023 · 3 posts · 4 votes

We bought a property the end of last year that needed more work than we realized, so we started gathering estimates for rehabbing the property. Anyways, we had someone make an offer on our property that would get us out of the deal and breaking even. We started the process to sell it and this is what the buyer’s attorney has brought to our attention. I summarized and consolidated multiple emails into the below segment.

“We have reviewed the title and found that there was a tax deed issued in 2023. The property has since been sold twice and no quiet title action or a quit claim deed from the defaulting tax payer have been recorded. In order to issue a clean title, General Warranty Deed, and an owner's title policy to our new buyer we will need one of those two things. That is the only way to clear the title. The affidavit recorded with the deed does not dismiss the title issue or clear it. Our title insurance agency will not be able to insure this without either a deed from the defaulting tax payer or a quiet title action by the seller.”

When we purchased the house we were given title insurance and a general warranty deed and when I provided my paper work to the buyers real estate attorney they sent the above messages to us and our previous closing attorney. What is the actual problem? Do I own this house? What do I actually need to do in order to fix this? Do I contact a title search company or a real estate attorney to begin solving this “issue”?

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Kevin Sobilo

Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes

@Conrad Meier, this is not uncommon with a tax sale property.

The process is VERY messy and so the prior owner or other interested parties could have cause to reverse the sale. For example your state's law might require a prior owner who resided in the property to be notified in person but they may not have been able to locate and serve them notice or an interested party may have been notified at the wrong address. These issues create clouds on the title.

Many title companies won't issue title insurance for a period of time after a tax sale before of the liklihood of something like this popping up, sometimes even after a quiet title action is done.

So, the title insurance company the buyer is using wants either the prior owner to sign a quit claim deed so they know this won't be an issue or for you to do a quiet title action so that owner has only that one last chance to come forward settling the issue. That would be very typical work an investor would do when they buy a tax sale property.

One other suggestion you might take is to suggest they use the title company you got insured through because apparently they are more relaxed with their requirements.

I would also discuss with your lawyer about providing a General Warranty deed. In my state a Special Warranty deed is most common. A General Warranty deed means that buyer can hold YOU legally responsible for any title issues later on even if the issue happened BEFORE you owned the property. With a Special Warranty deed they can only hold you accountable for title issues that happened during your ownership of the property. I'm not sure what is the common practice in your state, so I would discuss with a lawyer.

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Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
@Conrad Meier, this is not uncommon with a tax sale property.
The process is VERY messy and so the prior owner or other interested parties could have cause to reverse the sale. For example your state's law might require a prior owner who resided in the property to be notified in person but they may not have been able to locate and serve them notice or an interested party may have been notified at the wrong address. These issues create clouds on the title.
Many title companies won't issue title insurance for a period of time after a tax sale before of the liklihood of something like this popping up, sometimes even after a quiet title action is done.
So, the title insurance company the buyer is using wants either the prior owner to sign a quit claim deed so they know this won't be an issue or for you to do a quiet title action so that owner has only that one last chance to come forward settling the issue. That would be very typical work an investor would do when they buy a tax sale property.
One other suggestion you might take is to suggest they use the title company you got insured through because apparently they are more relaxed with their requirements.
I would also discuss with your lawyer about providing a General Warranty deed. In my state a Special Warranty deed is most common. A General Warranty deed means that buyer can hold YOU legally responsible for any title issues later on even if the issue happened BEFORE you owned the property. With a Special Warranty deed they can only hold you accountable for title issues that happened during your ownership of the property. I'm not sure what is the common practice in your state, so I would discuss with a lawyer.
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Conrad Meier
OP
Member since 2023 · 3 posts · 4 votes
2y
@Kevin Sobilo This was our first investment property and this is driving me crazy at the moment. What I can't seem to find is what the actual step is. Would I contact the previous closing attorney and tell them I need a quit claim deed from the people I technically bought from? If I were to do a quiet title action what do those actual steps look like? I don't think the buyer will want to use the prior title company, because of the issues we are currently having with their closing attorneys. I would hope there would be a special warranty deed in my state as I do not want to be held legally responsible for past mistakes lol. If this were you would you find a different real estate attorney to help with the quiet title action due to the issues the previous closing attorney has caused? Is there any way I can get them to do the actual work instead of this sucking the life out of me, since I paid them for closing and the title insurance? Thanks for your help btw!
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Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
Quote from @Conrad Meier:

@Kevin Sobilo This was our first investment property and this is driving me crazy at the moment. What I can't seem to find is what the actual step is. Would I contact the previous closing attorney and tell them I need a quit claim deed from the people I technically bought from? If I were to do a quiet title action what do those actual steps look like? I don't think the buyer will want to use the prior title company, because of the issues we are currently having with their closing attorneys. I would hope there would be a special warranty deed in my state as I do not want to be held legally responsible for past mistakes lol. If this were you would you find a different real estate attorney to help with the quiet title action due to the issues the previous closing attorney has caused? Is there any way I can get them to do the actual work instead of this sucking the life out of me, since I paid them for closing and the title insurance? Thanks for your help btw!

This is the work of a real estate investor, no reason to be this upset about it. There are problems and risks involved that is the nature of it. Tax sales are by no means "easy money" like many people think and I would never recommend a tax sale for a first timer for EXACTLY these reasons.
The previous closing attorney got you what you needed to protect you. I don't think they did anything wrong per se. If you asked for their legal advice in general they probably should have explained more about this but if its just someone you asked to handle the closing and issue you title insurance that is all they did because that is all you asked them to do.
So, I wouldn't hold any of this against them. If you hired a roofer to put on a roof and 6 months later the gutters leak do you blame the roofer?!? If you had asked them to replace the gutters, yes or if you asked them to check if the gutters needed work yes, but if you didn't ask them anything about gutters then no.
A quiet title action takes several months to complete in my state. The lawyer needs to file an action with the court and then advertise that there is a hearing about this property for a period of time so that anyone who has interest in the property will know to come forward for the hearing. Then when nobody comes to the hearing, the judge says that nobody can come later on and make any claims.
I recommend getting referrals to a good real estate attorney whether its the one who handled the closing or someone else. If you plan to invest in real estate you want a relationship with someone you can hire for issues or even to get questions answered.
As for the special warranty versus general warranty difference. It may be the norm in your state to use general warranty deeds, but I would ask so that I understood if that was the case. Each state is a little different.
BTW, this is the kind of thing a real estate agent helps buyers and sellers worth though. People thing they earn their money just by taking pictures and opening doors for showings, but helping buyers and sellers understand and navigate issues like this is where a good agent REALLY EARNS their money.
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Conrad Meier:

We bought a property the end of last year that needed more work than we realized, so we started gathering estimates for rehabbing the property. Anyways, we had someone make an offer on our property that would get us out of the deal and breaking even. We started the process to sell it and this is what the buyer’s attorney has brought to our attention. I summarized and consolidated multiple emails into the below segment.

“We have reviewed the title and found that there was a tax deed issued in 2023. The property has since been sold twice and no quiet title action or a quit claim deed from the defaulting tax payer have been recorded. In order to issue a clean title, General Warranty Deed, and an owner's title policy to our new buyer we will need one of those two things. That is the only way to clear the title. The affidavit recorded with the deed does not dismiss the title issue or clear it. Our title insurance agency will not be able to insure this without either a deed from the defaulting tax payer or a quiet title action by the seller.”

When we purchased the house we were given title insurance and a general warranty deed and when I provided my paper work to the buyers real estate attorney they sent the above messages to us and our previous closing attorney. What is the actual problem? Do I own this house? What do I actually need to do in order to fix this? Do I contact a title search company or a real estate attorney to begin solving this “issue”?

Contact the title insurance company and file a title claim against it. If you are unfamiliar send the title insurance to the current title company and ask them to file the claim on your behalf.
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Conrad Meier
OP
Member since 2023 · 3 posts · 4 votes
2y
@Kevin Sobilo and @Chris Seveney thank you both so much for your input. I have written down your advice and will be speaking with a lawyer this afternoon. I really appreciate your help and wish you both the best in real estate investing. This is a lot to learn in the fire, but sometimes the best education comes through blood, sweat, and tears! Have a great day!
2 Reply
Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
Quote from @Chris Seveney:

Quote from @Conrad Meier:

We bought a property the end of last year that needed more work than we realized, so we started gathering estimates for rehabbing the property. Anyways, we had someone make an offer on our property that would get us out of the deal and breaking even. We started the process to sell it and this is what the buyer’s attorney has brought to our attention. I summarized and consolidated multiple emails into the below segment.

“We have reviewed the title and found that there was a tax deed issued in 2023. The property has since been sold twice and no quiet title action or a quit claim deed from the defaulting tax payer have been recorded. In order to issue a clean title, General Warranty Deed, and an owner's title policy to our new buyer we will need one of those two things. That is the only way to clear the title. The affidavit recorded with the deed does not dismiss the title issue or clear it. Our title insurance agency will not be able to insure this without either a deed from the defaulting tax payer or a quiet title action by the seller.”

When we purchased the house we were given title insurance and a general warranty deed and when I provided my paper work to the buyers real estate attorney they sent the above messages to us and our previous closing attorney. What is the actual problem? Do I own this house? What do I actually need to do in order to fix this? Do I contact a title search company or a real estate attorney to begin solving this “issue”?

Contact the title insurance company and file a title claim against it. If you are unfamiliar send the title insurance to the current title company and ask them to file the claim on your behalf.

@Chris Seveney, I thought about that but I doubt that a different title company having different criteria with regard to insuring a title would constitute a title issue that would be covered.
If the prior owner actually came and made a claim and tried to reverse the tax sale then that would make sense to me.
Its worth a try as there is nothing to lose by calling, but that would be what I would expect. At this point the new title company just has a different view of the risk.
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Conrad Meier:

We bought a property the end of last year that needed more work than we realized, so we started gathering estimates for rehabbing the property. Anyways, we had someone make an offer on our property that would get us out of the deal and breaking even. We started the process to sell it and this is what the buyer’s attorney has brought to our attention. I summarized and consolidated multiple emails into the below segment.

“We have reviewed the title and found that there was a tax deed issued in 2023. The property has since been sold twice and no quiet title action or a quit claim deed from the defaulting tax payer have been recorded. In order to issue a clean title, General Warranty Deed, and an owner's title policy to our new buyer we will need one of those two things. That is the only way to clear the title. The affidavit recorded with the deed does not dismiss the title issue or clear it. Our title insurance agency will not be able to insure this without either a deed from the defaulting tax payer or a quiet title action by the seller.”

When we purchased the house we were given title insurance and a general warranty deed and when I provided my paper work to the buyers real estate attorney they sent the above messages to us and our previous closing attorney. What is the actual problem? Do I own this house? What do I actually need to do in order to fix this? Do I contact a title search company or a real estate attorney to begin solving this “issue”?

Contact the title insurance company and file a title claim against it. If you are unfamiliar send the title insurance to the current title company and ask them to file the claim on your behalf.

@Chris Seveney, I thought about that but I doubt that a different title company having different criteria with regard to insuring a title would constitute a title issue that would be covered.
If the prior owner actually came and made a claim and tried to reverse the tax sale then that would make sense to me.
Its worth a try as there is nothing to lose by calling, but that would be what I would expect. At this point the new title company just has a different view of the risk.

AHh, I misread it, they are just being overly conservative which many title companies are. They are gonna want to get a quiet title action.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Chris Seveney:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Conrad Meier:

We bought a property the end of last year that needed more work than we realized, so we started gathering estimates for rehabbing the property. Anyways, we had someone make an offer on our property that would get us out of the deal and breaking even. We started the process to sell it and this is what the buyer’s attorney has brought to our attention. I summarized and consolidated multiple emails into the below segment.

“We have reviewed the title and found that there was a tax deed issued in 2023. The property has since been sold twice and no quiet title action or a quit claim deed from the defaulting tax payer have been recorded. In order to issue a clean title, General Warranty Deed, and an owner's title policy to our new buyer we will need one of those two things. That is the only way to clear the title. The affidavit recorded with the deed does not dismiss the title issue or clear it. Our title insurance agency will not be able to insure this without either a deed from the defaulting tax payer or a quiet title action by the seller.”

When we purchased the house we were given title insurance and a general warranty deed and when I provided my paper work to the buyers real estate attorney they sent the above messages to us and our previous closing attorney. What is the actual problem? Do I own this house? What do I actually need to do in order to fix this? Do I contact a title search company or a real estate attorney to begin solving this “issue”?

Contact the title insurance company and file a title claim against it. If you are unfamiliar send the title insurance to the current title company and ask them to file the claim on your behalf.

@Chris Seveney, I thought about that but I doubt that a different title company having different criteria with regard to insuring a title would constitute a title issue that would be covered.
If the prior owner actually came and made a claim and tried to reverse the tax sale then that would make sense to me.
Its worth a try as there is nothing to lose by calling, but that would be what I would expect. At this point the new title company just has a different view of the risk.

AHh, I misread it, they are just being overly conservative which many title companies are. They are gonna want to get a quiet title action.

chris would the title insurer who did this for this buyer Not have to have an exception on the title policy that this buyer got.. ???? this is my issue in attorney closing states.. where they just send an e mail and say title is fine.. I dont go for that I want a copy of their title commitment and read it for myself. Might be fine to them but not to me. Out our way title commitment is sent to us within 3 to 5 days of opening escrow and we have to sign off on it that we read and approved.
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Kevin Sobilo
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y
Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Conrad Meier:

We bought a property the end of last year that needed more work than we realized, so we started gathering estimates for rehabbing the property. Anyways, we had someone make an offer on our property that would get us out of the deal and breaking even. We started the process to sell it and this is what the buyer’s attorney has brought to our attention. I summarized and consolidated multiple emails into the below segment.

“We have reviewed the title and found that there was a tax deed issued in 2023. The property has since been sold twice and no quiet title action or a quit claim deed from the defaulting tax payer have been recorded. In order to issue a clean title, General Warranty Deed, and an owner's title policy to our new buyer we will need one of those two things. That is the only way to clear the title. The affidavit recorded with the deed does not dismiss the title issue or clear it. Our title insurance agency will not be able to insure this without either a deed from the defaulting tax payer or a quiet title action by the seller.”

When we purchased the house we were given title insurance and a general warranty deed and when I provided my paper work to the buyers real estate attorney they sent the above messages to us and our previous closing attorney. What is the actual problem? Do I own this house? What do I actually need to do in order to fix this? Do I contact a title search company or a real estate attorney to begin solving this “issue”?

Contact the title insurance company and file a title claim against it. If you are unfamiliar send the title insurance to the current title company and ask them to file the claim on your behalf.

@Chris Seveney, I thought about that but I doubt that a different title company having different criteria with regard to insuring a title would constitute a title issue that would be covered.
If the prior owner actually came and made a claim and tried to reverse the tax sale then that would make sense to me.
Its worth a try as there is nothing to lose by calling, but that would be what I would expect. At this point the new title company just has a different view of the risk.

AHh, I misread it, they are just being overly conservative which many title companies are. They are gonna want to get a quiet title action.

chris would the title insurer who did this for this buyer Not have to have an exception on the title policy that this buyer got.. ???? this is my issue in attorney closing states.. where they just send an e mail and say title is fine.. I dont go for that I want a copy of their title commitment and read it for myself. Might be fine to them but not to me. Out our way title commitment is sent to us within 3 to 5 days of opening escrow and we have to sign off on it that we read and approved.

Excellent point! I had not considered that because I was imaging a deal where they purchased with a loan and the lender would not have accepted excluding issues like this.

However, if this was a cash purchase, the buyer may have signed off on title insurance with items such as these excluded from the title insurance.
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
2y
Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Conrad Meier:

We bought a property the end of last year that needed more work than we realized, so we started gathering estimates for rehabbing the property. Anyways, we had someone make an offer on our property that would get us out of the deal and breaking even. We started the process to sell it and this is what the buyer’s attorney has brought to our attention. I summarized and consolidated multiple emails into the below segment.

“We have reviewed the title and found that there was a tax deed issued in 2023. The property has since been sold twice and no quiet title action or a quit claim deed from the defaulting tax payer have been recorded. In order to issue a clean title, General Warranty Deed, and an owner's title policy to our new buyer we will need one of those two things. That is the only way to clear the title. The affidavit recorded with the deed does not dismiss the title issue or clear it. Our title insurance agency will not be able to insure this without either a deed from the defaulting tax payer or a quiet title action by the seller.”

When we purchased the house we were given title insurance and a general warranty deed and when I provided my paper work to the buyers real estate attorney they sent the above messages to us and our previous closing attorney. What is the actual problem? Do I own this house? What do I actually need to do in order to fix this? Do I contact a title search company or a real estate attorney to begin solving this “issue”?

Contact the title insurance company and file a title claim against it. If you are unfamiliar send the title insurance to the current title company and ask them to file the claim on your behalf.

@Chris Seveney, I thought about that but I doubt that a different title company having different criteria with regard to insuring a title would constitute a title issue that would be covered.
If the prior owner actually came and made a claim and tried to reverse the tax sale then that would make sense to me.
Its worth a try as there is nothing to lose by calling, but that would be what I would expect. At this point the new title company just has a different view of the risk.

AHh, I misread it, they are just being overly conservative which many title companies are. They are gonna want to get a quiet title action.

chris would the title insurer who did this for this buyer Not have to have an exception on the title policy that this buyer got.. ???? this is my issue in attorney closing states.. where they just send an e mail and say title is fine.. I dont go for that I want a copy of their title commitment and read it for myself. Might be fine to them but not to me. Out our way title commitment is sent to us within 3 to 5 days of opening escrow and we have to sign off on it that we read and approved.

This was my thinking thay maybe the policy has an exception for this....and the new end buyer here is not willing to accept the title and new policy with the same exception. I know I would want a fully cleared title with no exception on the policy in most cases.
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Conrad Meier:

We bought a property the end of last year that needed more work than we realized, so we started gathering estimates for rehabbing the property. Anyways, we had someone make an offer on our property that would get us out of the deal and breaking even. We started the process to sell it and this is what the buyer’s attorney has brought to our attention. I summarized and consolidated multiple emails into the below segment.

“We have reviewed the title and found that there was a tax deed issued in 2023. The property has since been sold twice and no quiet title action or a quit claim deed from the defaulting tax payer have been recorded. In order to issue a clean title, General Warranty Deed, and an owner's title policy to our new buyer we will need one of those two things. That is the only way to clear the title. The affidavit recorded with the deed does not dismiss the title issue or clear it. Our title insurance agency will not be able to insure this without either a deed from the defaulting tax payer or a quiet title action by the seller.”

When we purchased the house we were given title insurance and a general warranty deed and when I provided my paper work to the buyers real estate attorney they sent the above messages to us and our previous closing attorney. What is the actual problem? Do I own this house? What do I actually need to do in order to fix this? Do I contact a title search company or a real estate attorney to begin solving this “issue”?

Contact the title insurance company and file a title claim against it. If you are unfamiliar send the title insurance to the current title company and ask them to file the claim on your behalf.

@Chris Seveney, I thought about that but I doubt that a different title company having different criteria with regard to insuring a title would constitute a title issue that would be covered.
If the prior owner actually came and made a claim and tried to reverse the tax sale then that would make sense to me.
Its worth a try as there is nothing to lose by calling, but that would be what I would expect. At this point the new title company just has a different view of the risk.

AHh, I misread it, they are just being overly conservative which many title companies are. They are gonna want to get a quiet title action.

chris would the title insurer who did this for this buyer Not have to have an exception on the title policy that this buyer got.. ???? this is my issue in attorney closing states.. where they just send an e mail and say title is fine.. I dont go for that I want a copy of their title commitment and read it for myself. Might be fine to them but not to me. Out our way title commitment is sent to us within 3 to 5 days of opening escrow and we have to sign off on it that we read and approved.

great question. We always get the title commitment letter to review and send that to our attorney to review. We have had issues in the past where as the lender we foreclosed, then sold the property and the buyers title company would not give title insurance. Its really about level of risk by that provider. Where we have seen the most challenges has been on the infamous contract for deeds. Those can create tons of havoc for title insurance.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Chris Seveney:

Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Conrad Meier:

We bought a property the end of last year that needed more work than we realized, so we started gathering estimates for rehabbing the property. Anyways, we had someone make an offer on our property that would get us out of the deal and breaking even. We started the process to sell it and this is what the buyer’s attorney has brought to our attention. I summarized and consolidated multiple emails into the below segment.

“We have reviewed the title and found that there was a tax deed issued in 2023. The property has since been sold twice and no quiet title action or a quit claim deed from the defaulting tax payer have been recorded. In order to issue a clean title, General Warranty Deed, and an owner's title policy to our new buyer we will need one of those two things. That is the only way to clear the title. The affidavit recorded with the deed does not dismiss the title issue or clear it. Our title insurance agency will not be able to insure this without either a deed from the defaulting tax payer or a quiet title action by the seller.”

When we purchased the house we were given title insurance and a general warranty deed and when I provided my paper work to the buyers real estate attorney they sent the above messages to us and our previous closing attorney. What is the actual problem? Do I own this house? What do I actually need to do in order to fix this? Do I contact a title search company or a real estate attorney to begin solving this “issue”?

Contact the title insurance company and file a title claim against it. If you are unfamiliar send the title insurance to the current title company and ask them to file the claim on your behalf.

@Chris Seveney, I thought about that but I doubt that a different title company having different criteria with regard to insuring a title would constitute a title issue that would be covered.
If the prior owner actually came and made a claim and tried to reverse the tax sale then that would make sense to me.
Its worth a try as there is nothing to lose by calling, but that would be what I would expect. At this point the new title company just has a different view of the risk.

AHh, I misread it, they are just being overly conservative which many title companies are. They are gonna want to get a quiet title action.

chris would the title insurer who did this for this buyer Not have to have an exception on the title policy that this buyer got.. ???? this is my issue in attorney closing states.. where they just send an e mail and say title is fine.. I dont go for that I want a copy of their title commitment and read it for myself. Might be fine to them but not to me. Out our way title commitment is sent to us within 3 to 5 days of opening escrow and we have to sign off on it that we read and approved.

great question. We always get the title commitment letter to review and send that to our attorney to review. We have had issues in the past where as the lender we foreclosed, then sold the property and the buyers title company would not give title insurance. Its really about level of risk by that provider. Where we have seen the most challenges has been on the infamous contract for deeds. Those can create tons of havoc for title insurance.

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Peter Walther
Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
2y
I suggest you immediately submit a claim to the title insurer whose policy you received. The contact information should be listed in the Conditions section of the policy.
If a buyer objects to title because of a reason that is not excluded or excepted from coverage, it may be a marketability of title issue which would probably be covered. If there is an exception there may not be coverage, but the worst result you can get to your claim is a denial and you're no worse off.
2 Reply
Lee Macky
Member since 2024 · 15 posts · 1 vote
2y
Quote from @Kevin Sobilo:

@Conrad Meier, this is not uncommon with a tax sale property.
The process is VERY messy and so the prior owner or other interested parties could have cause to reverse the sale. For example your state's law might require a prior owner who resided in the property to be notified in person but they may not have been able to locate and serve them notice or an interested party may have been notified at the wrong address. These issues create clouds on the title.
Many title companies won't issue title insurance for a period of time after a tax sale before of the liklihood of something like this popping up, sometimes even after a quiet title action is done.
So, the title insurance company the buyer is using wants either the prior owner to sign a quit claim deed so they know this won't be an issue or for you to do a quiet title action so that owner has only that one last chance to come forward settling the issue. That would be very typical work an investor would do when they buy a tax sale property.
One other suggestion you might take is to suggest they use the title company you got insured through because apparently they are more relaxed with their requirements.
I would also discuss with your lawyer about providing a General Warranty deed. In my state a Special Warranty deed is most common. A General Warranty deed means that buyer can hold YOU legally responsible for any title issues later on even if the issue happened BEFORE you owned the property. With a Special Warranty deed they can only hold you accountable for title issues that happened during your ownership of the property. I'm not sure what is the common practice in your state, so I would discuss with a lawyer.

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Lee Macky
Member since 2024 · 15 posts · 1 vote
2y
So, will a lender lend on a special warranty deed? Do you need a special affidavit filed?
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Lee Macky
Member since 2024 · 15 posts · 1 vote
2y
So, I purchased a tax sale property. Received a special warranty deed. Treasurer and recorder say I have a clear title. Now, 2.5 years later I'm trying to sell and the buyers attorney is saying I don't have a clear title. My now attorney is just along for the pay.....no help. A 120 affidavit was not filed . No one except for realtors are aware of this affidavit
1 Reply
Lee Macky
Member since 2024 · 15 posts · 1 vote
2y
Quote from @Lee Macky:

So, I purchased a tax sale property. Received a special warranty deed. Treasurer and recorder say I have a clear title. Now, 2.5 years later I'm trying to sell and the buyers attorney is saying I don't have a clear title. My now attorney is just along for the pay.....no help. A 120 affidavit was not filed . No one except for realtors are aware of this affidavit

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Lee Macky:

So, I purchased a tax sale property. Received a special warranty deed. Treasurer and recorder say I have a clear title. Now, 2.5 years later I'm trying to sell and the buyers attorney is saying I don't have a clear title. My now attorney is just along for the pay.....no help. A 120 affidavit was not filed . No one except for realtors are aware of this affidavit

not sure what state but many states if you dont quiet title you have to wait 5 to 10 years to get clean title.
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Eric James
Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
2y
Quote from @Chris Seveney:

Quote from @Jay Hinrichs:

Quote from @Chris Seveney:

Quote from @Kevin Sobilo:

Quote from @Chris Seveney:

Quote from @Conrad Meier:

We bought a property the end of last year that needed more work than we realized, so we started gathering estimates for rehabbing the property. Anyways, we had someone make an offer on our property that would get us out of the deal and breaking even. We started the process to sell it and this is what the buyer’s attorney has brought to our attention. I summarized and consolidated multiple emails into the below segment.

“We have reviewed the title and found that there was a tax deed issued in 2023. The property has since been sold twice and no quiet title action or a quit claim deed from the defaulting tax payer have been recorded. In order to issue a clean title, General Warranty Deed, and an owner's title policy to our new buyer we will need one of those two things. That is the only way to clear the title. The affidavit recorded with the deed does not dismiss the title issue or clear it. Our title insurance agency will not be able to insure this without either a deed from the defaulting tax payer or a quiet title action by the seller.”

When we purchased the house we were given title insurance and a general warranty deed and when I provided my paper work to the buyers real estate attorney they sent the above messages to us and our previous closing attorney. What is the actual problem? Do I own this house? What do I actually need to do in order to fix this? Do I contact a title search company or a real estate attorney to begin solving this “issue”?

Contact the title insurance company and file a title claim against it. If you are unfamiliar send the title insurance to the current title company and ask them to file the claim on your behalf.

@Chris Seveney, I thought about that but I doubt that a different title company having different criteria with regard to insuring a title would constitute a title issue that would be covered.
If the prior owner actually came and made a claim and tried to reverse the tax sale then that would make sense to me.
Its worth a try as there is nothing to lose by calling, but that would be what I would expect. At this point the new title company just has a different view of the risk.

AHh, I misread it, they are just being overly conservative which many title companies are. They are gonna want to get a quiet title action.

chris would the title insurer who did this for this buyer Not have to have an exception on the title policy that this buyer got.. ???? this is my issue in attorney closing states.. where they just send an e mail and say title is fine.. I dont go for that I want a copy of their title commitment and read it for myself. Might be fine to them but not to me. Out our way title commitment is sent to us within 3 to 5 days of opening escrow and we have to sign off on it that we read and approved.

great question. We always get the title commitment letter to review and send that to our attorney to review. We have had issues in the past where as the lender we foreclosed, then sold the property and the buyers title company would not give title insurance. Its really about level of risk by that provider. Where we have seen the most challenges has been on the infamous contract for deeds. Those can create tons of havoc for title insurance.

In those cases are the buyers unwilling to use a different title commit that will provide title insurance (such as the one that gave you title insurance)?
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Peter Walther
Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
2y
Quote from @Lee Macky:

So, I purchased a tax sale property. Received a special warranty deed. Treasurer and recorder say I have a clear title. Now, 2.5 years later I'm trying to sell and the buyers attorney is saying I don't have a clear title. My now attorney is just along for the pay.....no help. A 120 affidavit was not filed . No one except for realtors are aware of this affidavit

If you purchased a tax sale property at a tax sale, I think you would have received a tax deed and not a SWD. If you purchased from the party who purchased at the tax sale you probably would have received a SWD because the Grantor would not have wanted to warrant anything other than the Grantor's actions.
While I'd be surprised if a county employee opined on the status of your title, there may be a difference between having a clear title (one without a current challenge) and insurable title (one free of significant possible risk of being challenge in the future). Since without a quiet title action the title may be subject to challenge by the former owner or lienholders, title insurers may not be willing to issue a title policy w/o exception for that risk.
I don't know what a 120 affidavit is. Can you explain?
2 Reply
Lee Macky
Member since 2024 · 15 posts · 1 vote
2y
Quote from @Lee Macky:

So, I purchased a tax sale property. Received a special warranty deed. Treasurer and recorder say I have a clear title. Now, 2.5 years later I'm trying to sell and the buyers attorney is saying I don't have a clear title. My now attorney is just along for the pay.....no help. A 120 affidavit was not filed . No one except for realtors are aware of this affidavit

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Lee Macky
Member since 2024 · 15 posts · 1 vote
2y
Only realtors know what this 120 affidavit is. It makes mo since to me. It notifies any lien holders. Just like the 90 day affidavit.
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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
2y
@Lee Macky They type of deed has nothing to do with weather you have good title. The type of deed only describes the sellers responsibility and guarantees to you if there is a title problem. That is why you get title insurance to back you up if there is a problem
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Lee Macky
Member since 2024 · 15 posts · 1 vote
2y
Quote from @Ned Carey:

@Lee Macky They type of deed has nothing to do with weather you have good title. The type of deed only describes the sellers responsibility and guarantees to you if there is a title problem. That is why you get title insurance to back you up if there is a problem

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