Purchasing tax deed properties offers real estate investors a great way to obtain desirable properties at much lower prices than usual. While these properties present great investment opportunities, it’s important for investors to realize the risk associated with purchasing such real estate. One common issue with tax deed purchases is a blemished title.
There are many ways through which investors can obtain a clean title when purchasing tax deed sales. Understanding the pros and cons of each will help you make better investment decisions in the future.
A tax deed sale happens when the owner fails to pay property taxes. Properties are auctioned off at the county courthouse as a way to collect the outstanding debts. If the tax lien is a higher priority than other existing liens on the property, the other liens will be wiped out at the time of purchase. For example, since mortgages are lower priority than tax liens, the loan will not become the new owner’s responsibility.
Tax deed sales may come with other liens on the property, which can be found by researching the property’s title before purchasing. Some liens stay on the title, including IRS liens, delinquent child support, and other civil liens that could cause problems for new property owners. While these debts are not your own, purchasing the property and inheriting the title makes you financially liable to repay them.
One way to ensure the title on your property is clear is by filing an action to quiet title through the court system. An action to quiet title removes all pre-existing liens and third-party interests from your property’s title, eliminating further financial obligation.
Actions to quiet title are effective; however, this process involves thousands of dollars in legal fees. Additionally, it can take up to nine months, and in some cases can last more than a year from the purchase date. It is your responsibility to thoroughly research the tax deed property’s title prior to purchase. For that reason, the only way to win a suit to quiet title is by illustrating to the judge that there was a clerical error in the title, leading to a misinformed purchase. Even then, a judge may not rule in your favor and may require you to reach a settlement agreement with the lien holder.
The alternative to a quiet title suit is title certification. Through this process, a tax title curative consultant will review and verify the completeness and accuracy of the tax lien foreclosure process. Upon verification, the consultant will partner you with a title insurance agent, clearing your property’s title and offering you protection from unexpected financial or legal obligations.
This process is much less expensive than filing an action to quiet title. What’s more, title certification can be completed in as little as four weeks. Choosing this method saves you both time and money, allowing you to have a clear title faster and offering continued protection for years to come.
Tax Title Services offers customers the benefit of our unique certification process, clearing your title in no time. Our consultants perform a thorough review of tax lien foreclosure due process for your property, partnering you with expert title insurance underwriters for your added convenience.
Don’t inherit someone else’s debt. Contact TTS to find out more about our certification process and obtaining title insurance for your tax deed property.