Is a Quiet Title Action needed for Title Insurance

OP

Investor · Folsom, CA · Member since 2010 · 85 posts · 9 votes

1mo

Member since 2018 · 1k+ posts · 1k+ votes

1mo

Here’s some clarification: a title company will always insure title. What it will do is except from coverage anything that might give it a claim. What you want to do is skip trace the trust deed holder and decide if you can buy his potential claim against the property.

Also check state law. A tax lien foreclosure is usually one of super priority. Consult a lawyer, but prepare for litigation to prove you’re right. See if you can buy him out first.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
1mo
Quote from @John Clark:

Here’s some clarification: a title company will always insure title. What it will do is except from coverage anything that might give it a claim. What you want to do is skip trace the trust deed holder and decide if you can buy his potential claim against the property.
Also check state law. A tax lien foreclosure is usually one of super priority. Consult a lawyer, but prepare for litigation to prove you’re right. See if you can buy him out first.

on top of this excellent advice there is a few title companies that specilize in insurance for tax sales.. although not every lender will rely on them and may not make a loan based on their policy.
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Abdenour Achab
OP
Investor · Folsom, CA · Member since 2010 · 85 posts · 9 votes
1mo
Quote from @John Clark:

a title company will always insure title. What it will do is except from coverage anything that might give it a claim.
Thanks John for that insight. Unfortunately, the house I am considering is a fairly modest house in Smallville Arizona. The current owner, who bought it with owner financing from the previous owner, has put very little down and has almost no equity. If and when I acquire the house, any successful claim by that previous owner would wipe out almost all the equity in that house. So, a title insurance that would except such a claim would be almost worthless.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
1mo
Quote from @Abdenour Achab:

Quote from @John Clark:

a title company will always insure title. What it will do is except from coverage anything that might give it a claim.
Thanks John for that insight. Unfortunately, the house I am considering is a fairly modest house in Smallville Arizona. The current owner, who bought it with owner financing from the previous owner, has put very little down and has almost no equity. If and when I acquire the house, any successful claim by that previous owner would wipe out almost all the equity in that house. So, a title insurance that would except such a claim would be almost worthless.

pretty sure tax sale wipes out the owner finance.. this is why very few homes actually go to sale unless they are free and clear the person who holds the owner finance contract will redeem 99% of the time and many times the day before the sale :)
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Eric James

Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes

1mo

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.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
1mo
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.
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Eric James
Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
1mo
Quote from @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.

That's some volume.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
1mo
Quote from @Eric James:

Quote from @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.

That's some volume.

in the day we were selling vacation lots and had offices in LA and SF bay area and about 20 agents working for us at a time.. The last vestige of the land boom ala land sales in FLA or if you have seen Glen Gary Glen Ross movie exact same thing I mean exactly how it worked.
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Abdenour Achab
OP
Investor · Folsom, CA · Member since 2010 · 85 posts · 9 votes
1mo
Quote from @Jay Hinrichs:

Quote from @Eric James:

You generally have to wait 2-3 years, though for a while I had one that would insure after 1 year.

... through one when in a good year we might have about 500 total transactions .......... The others would not touch them for 5 years.
Thanks Eric and Jay for chiming in. I am much closer to doing one transaction every 500 years than to 500 transactions per year. So, I wield exactly 0.0000000353 power with title companies.

On the other hand, that works somewhat in my favor. I don't own any house right now and live in an apartment. So, even if I acquire a modest house and and no title company would insure it without exceptions right away, I wouldn't mind moving into it myself and living there five year or so until some title company would be willing to insure it without exception. I just don't want that house to become my life sentence to Smallville Arizona.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
1mo
Quote from @Abdenour Achab:

Quote from @Jay Hinrichs:

Quote from @Eric James:

You generally have to wait 2-3 years, though for a while I had one that would insure after 1 year.

... through one when in a good year we might have about 500 total transactions .......... The others would not touch them for 5 years.
Thanks Eric and Jay for chiming in. I am much closer to doing one transaction every 500 years than to 500 transactions per year. So, I wield exactly 0.0000000353 power with title companies.

On the other hand, that works somewhat in my favor. I don't own any house right now and live in an apartment. So, even if I acquire a modest house and and no title company would insure it without exceptions right away, I wouldn't mind moving into it myself and living there five year or so until some title company would be willing to insure it without exception. I just don't want that house to become my life sentence to Smallville Arizona.

@John Underwood I have heard John talk about his tax sale purchases that he rents and keeps basically forever title insurance is not something he cares about.. So as long as your a cash buyer and your going to use the property dont worry about title insurance VERY difficult to unwind a tax sale exceedingly rare in fact. Whats more difficult at least on the West side of the continental Divide is finding actual houses that go to tax sale.. Land sure but houses are not nearly as prevalent as it is in the mid west and some eastern states.
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Abdenour Achab
OP
Investor · Folsom, CA · Member since 2010 · 85 posts · 9 votes
1mo
M'y concern is not that they would unwind the tax sale. My concern is that, through a lawsuit, they would convince a judge that the service by publication was defective, and that the judge would reinstate their deed of trust. I'm this specific situation, that would wipe out almost all of the equity in the house.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
1mo
Quote from @Abdenour Achab:
M'y concern is not that they would unwind the tax sale. My concern is that, through a lawsuit, they would convince a judge that the service by publication was defective, and that the judge would reinstate their deed of trust. I'm this specific situation, that would wipe out almost all of the equity in the house.

well that is a risk of tax sales but its a very minor risk from my experince.
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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
1mo
Quote from @Jay Hinrichs:

Quote from @Abdenour Achab:

Quote from @Jay Hinrichs:

Quote from @Eric James:

You generally have to wait 2-3 years, though for a while I had one that would insure after 1 year.

... through one when in a good year we might have about 500 total transactions .......... The others would not touch them for 5 years.
Thanks Eric and Jay for chiming in. I am much closer to doing one transaction every 500 years than to 500 transactions per year. So, I wield exactly 0.0000000353 power with title companies.

On the other hand, that works somewhat in my favor. I don't own any house right now and live in an apartment. So, even if I acquire a modest house and and no title company would insure it without exceptions right away, I wouldn't mind moving into it myself and living there five year or so until some title company would be willing to insure it without exception. I just don't want that house to become my life sentence to Smallville Arizona.

@John Underwood I have heard John talk about his tax sale purchases that he rents and keeps basically forever title insurance is not something he cares about.. So as long as your a cash buyer and your going to use the property dont worry about title insurance VERY difficult to unwind a tax sale exceedingly rare in fact. Whats more difficult at least on the West side of the continental Divide is finding actual houses that go to tax sale.. Land sure but houses are not nearly as prevalent as it is in the mid west and some eastern states.

Correct!
And when I do sell I often just sell to a cash buyer with a Quit Claim deed or I hunt down the previous owners and give them a couple hundred for their time to sign a QC deed and get a release from any old mortgage and you have cleared the title yourself quickly and cheaply.
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Shiloh LundahlPro Member

Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes

1mo

@Abdenour Achab it seems like this particular house is meaningful to you. What about this particular house is so meaningful?

If you are interested in real estate investing, there are a lot of houses in Arizona that come up on the wholesale list. Why not just go that route rather than the tax lien route?

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Ned CareyPro Member

Moderator

Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes

1mo

Generally if you sell with title insurance you are safe. Maybe it is not 100% but It is good enough for me. The issue in Maryland was some title companies would not insure a tax sale. However we have found plenty of title companies that will.

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Ken M.

Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes

1mo

Quote from @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?

I don't dabble in tax liens, there is too much at stake for the return. But in Arizona, you aren't bidding on the property. You're bidding on the lien itself. The winning bid pays the amount to the county and takes a lien against the property with whatever interest rate they bid.

If the home owner hasn't redeemed the property in the 3 year limit the winning bidder can start a foreclosure. That runs another couple of months with all of it's expenses and delays. You'll still owe the underlying mortgage, new taxes and other assessments. Then will come the eviction process and eventually after this long 3 to 4 year process, you "should" own the property.

Keep in mind that a property owner can always counter sue, file for bankruptcy and stop the process or pay you the amount owed and he keeps the house. It's like trying to hit a cockroach with a lawn dart, may be fun and entertaining but rarely worth doing.

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

1mo

Quote from @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?

In Michigan, a tax sale results in the owner getting a Tax Deed.

Most title companies will NOT accept them as the counties processing the tax sales don't consistently publish their procedures. This make title companies nervous about whether or not all possible claimants were properly serviced.

So, many title companies now provide a fee service that uses FOIA to review what county did and they then MAY issue title policy.

If they reject coverage, then the owner has to file a quiet title case.

In no case can a previous owner really come after the tax sale buyer. Of course, this is the US and anyone can sue anyone, but the county would have to handle any legitimate case.

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Zuriel Galvez

Member since 2026 · 31 posts · 9 votes

1mo

Reading Jay's and Ned's answers together gets you the practical version of this: the title agent you're talking to usually isn't the one making the call.

The underwriter behind that agent sets the tax-title policy, and many agents are appointed with more than one. So "my title company won't insure a tax sale" often really means "the underwriter my agent defaults to won't," which is a different problem with a different fix. That may be a lot of what Ned ran into in Maryland.

So the question I'd ask isn't whether you need a quiet title action. It's what the underwriter's written requirements are for tax title in that state. Some will insure on an affidavit plus proof that statutory notice was properly served, after a waiting period. Others want a decree and nothing else will do. You get a straight answer in one call, and it tells you whether the QT is actually necessary or just the default advice everyone repeats.

Abdenour, on the Arizona service-by-publication question, that's what I'd chase down before spending on the action.

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Is a Quiet Title Action needed for Title Insurance

Is a Quiet Title Action needed for Title Insurance

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