Many tax deed investors dismiss the need for title insurance on tax deed properties they do not plan on selling.
When planning to sell a property, the need for title insurance is clear. A wise investor will prefer to sell their property via General Warranty Deed (with title insurance) to a buyer at full fair market value rather than selling via Quit Claim Deed.
But why should an investor secure a title policy on tax-deeded property they don’t plan on selling? Holding a tax deed property without title insurance is putting the investment at major risk of losses, or unplanned costs.
If an investor plans to buy and hold a tax deed property and wishes to refinance in order to draw some cash for reinvesting or make substantive repairs to or improve the property, a lender will require the property have title insurance.
Properties bought at tax deed auction are also particularly susceptible to risky defects in title by virtue of the fact they are tax deeded and come with clouded title. These types of properties often have issues in the back chain or clerical errors in noticing interested parties.
If a listed or undisclosed heir was missed during the required pre-auction noticing done by the county clerk, that leaves the door open for an adverse possession claim by that heir in the future. Without title insurance, this could pose a risk to the investment and great financial loss if the claim is proven valid.
Mortgages are wiped out with a tax deed sale so long as the bank was properly noticed of the sale as required by Florida Statute 197. But if a mistake was made during noticing and a mortgage was missed, then the bank can come forward and potentially reverse the sale if the surplus money doesn’t satisfy the outstanding lien.
Having title insurance on your retained tax deed property is essential. Title insurance is a one-time purchase providing complete coverage for as long as the insured owner or their heirs hold title to the property. A title insurance policy will satisfy valid claims against the insured title and all legal expenses of defending against the claim.
Investors in tax deed property should not hesitate to get a title insurance policy whether they plan to sell or not. Because without it, there is very limited protection against financial loss from claims coming forth due to clerical errors in the tax deed sale process or defects in the title.
Call us at 1-855-680-4908 or email us to learn more about how we help tax deed investors throughout Florida receive insurable title with our certifications; faster and less expensive than utilizing quiet title action, and the widest underwriter network and most desirable warranty deed scenario in the industry.
Winning the auction is an accomplishment in and of itself, and since tax deeds are purchased in a lump sum, sometimes cash is not readily . . .
Are you considering investing in Florida tax deeds? We don’t only offer tax deed title certification; we’re also consistently gathering Florida-specific information, statistics and legal . . .
Do you have any recommendations for Birmingham Al? I have several tax deed properties, I would like title insurance on. Does this do what a quiet title does or what’s the difference? Once insured can I sell through a real estate company or just buy owner? Will a mortgage company finance a buyer with title insurance on a tax deed property? Thanks
U.S. Army Veteran
We only work in the state of Florida at this time. There are similar companies that work in the State of Alabama. Our service is research-based and we work with underwriters to allow for fully insurable title policies on tax deeds with sales via a warranty deed. Quiet title actions take longer as they require an attorney and work within the court system. Once you have used either QTA or a QTA alternative you’ll be able to sell your tax deed to a buyer that wants to get title insurance with a Realtor or otherwise. You will need to speak with the Alabama-based companies to see if they provide for a warranty deed sale. And yes, a buyer will need title insurance to obtain a mortgage. Best of luck Michael, keep us in mind if you decide to invest in Florida!