The days are getting shorter, there's a crispness in the air, and the leaves are changing colors...That's right, folks, it's tax sale time again! You thought I was going to say something about pumpkin spice, didn't you? As magical as it may be, pumpkin spice will not help you with your investment budget when you go to the tax sale, but hopefully this blog series will. This month, I am writing a series of blog posts about quiet title actions, something every real estate investor should factor in when purchasing property at a tax sale.
Post #1: What is a quiet title lawsuit?
Post #2: Why would I need to do a quiet title lawsuit?
Post #3: What are the risks associated with a quiet title lawsuit?
Post #4: Quiet Title Myths Busted
First things first: What is a quiet title action?
A quiet title action is a lawsuit brought by a property owner to clear up any problems with the chain of title to the property. A problem in the chain of title is sometimes called a cloud on title. A tax sale in a property's chain of title is always going to be a problem until a quiet title action is completed with regard to the tax sale. I want to note here that a quiet title action is brought to address specific, known issues with a property. You have to know about the problem and name all other parties who may be associated with that problem in the lawsuit in order to take care of it. A quiet title action is not a universal cure to all title problems, known and unknown, so make sure you get an updated title search immediately after you purchase the property and before the quiet title action is filed so that the complaint can address all problems that may be present in the chain of title.
What is the process for bringing a quiet title action after a tax sale?
After a tax sale, you want to wait at least two years from the date of the tax sale before filing a quiet title action. This is because the previous owner (the defaulting taxpayer) typically cannot bring an action to recover the land after that point, with a few exceptions. Once the two years has passed, your attorney will order a new title search or title search update and review the results to see who needs to be named as defendants in the quiet title suit and which issues must be addressed. She will then draft the complaint, serve process on all the defendants, and wait 30 days to see if any defendants respond. If none of the defendants respond after 30 days, they are considered to be in default and your attorney can request a hearing with the court.
Sometimes the process of finding all the necessary defendants can be difficult, especially if any previous owners passed away without a will during their period of ownership. Ordering a skip trace and using a private process server can speed things up, but also adds to the cost. Sometimes it is necessary to name "unknown" defendants in the case and ask the court to appoint a Guardian Ad Litem (GAL) to protect their interests, which also adds to the cost of the case and the time it will take to complete.
In a typical quiet title case after a tax sale, the hearing lasts about 15 minutes. If everything is in order and all procedures have been followed correctly, the judge will sign the Order to Quiet Title. The order will be filed with the clerk of court and your attorney will record the order at the Register of Deeds office in the county where the property is located. After that, the title is officially quieted and the tax sale should no longer be considered a cloud on the title.
How long does the whole thing take?
The entire process typically takes 2-3 months. If there are problems finding defendants, it could take longer.
Can I do a quiet title myself?
You could try, but I would not recommend it. There are lots of lawyers who don't do quiet title work because the rules are very specific and the issues can be complex. At the end of the day, it will be faster and cheaper to hire an experienced quiet title attorney to handle it for you.
How much does a quiet title lawsuit cost?
Average fees for a quiet title action range from $1500 to $5000 and up, depending on the complexity of the case. Expenses normally stay under $500, but sometimes the costs can really get up there if a GAL or notice by publication is required, or if there are numerous defendants.
Next week: Why might you need a quiet title suit if there is not a tax sale in the property's history?