Quiet Title Alternative for Tax Deed Investors in Colorado
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Colorado real estate has exploded over the last decade or so.
With roughly 100K new residents flocking to the Rocky Mountain state annually, the property values have skyrocketed parallel to the growth.
Two things you can be sure to find in Colorado these days is an abundance of snow and real estate investors.
In an overcrowded market, many real estate investors have turned to tax liens for stable returns and the occasional property.
I say this because CO is similar to most tax lien sales across the country, around 95% of tax liens redeem so the investor should not really bank on receiving a property at these sales. But do not let this discourage you because the annual interest rate for tax liens in CO is 9% plus the federal prime rate as of September 1st of that year.
Although you do not bid down the interest rate, there is still significant risk of making a bad investment. In CO, you bid up a premium on the delinquent taxes owed; however, the 9% plus the federal prime rate is only applied against the principal delinquent amount, not the bid-up amount.
The other big warning flag to investors is that the county or municipality does not return the bid-up amount when a lien is redeemed. Let me repeat that, the county or municipality keeps excess proceeds from the bid-up amount after the tax lien redeems.
After an investor has held their tax lien certificate for 3 years, they can apply for a Treasurer’s Deed from the county.
Now the investor has ownership interest in the property. What comes next? Do you sell, build, take out a loan or just keep if for some good ole’ off the grid camping fun? Other than the camping, for any other use the investor is probably going to need title insurance but that is not as easy a task to obtain as one might think.
When a Treasurer’s Deed is issued for delinquent taxes, a non-judicial foreclosure has occurred. This means that the foreclosure did not go through the courts. This gives title insurance underwriters concern so standard underwriting practice has been for investors to conduct a quiet title action. This is a standard Schedule B requirement that will appear on any property with a Treasurer’s Deed in the chain of title, regardless of how many times investors will quit claim a property. But wait a minute, as an investor, do you really want to wait another 6-18 months for a quiet title or would you rather avoid the quiet title and use an expedited certification service so you can obtain title insurance for yourself, a lender or a potential buyer?
Tax Title Services has been in the business of assisting Colorado tax lien investors who receive a Treasurer’s Deed to obtain title insurance faster and cheaper than a quiet title action. The average certification in Colorado takes 30-60 days and costs thousands of dollars less than a quiet title action. Do not get stuck in the avalanche (see what I did there) of fees from a quiet title action and go with the one set fee and speedy service of a Tax Title Services certification.
The process is fast, simple and non-judicial so you do not have to go through the hassle of the courts like you would for a quiet title.