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Home · Property Management · Landlord Quick Tips · Guide for the Perplexed Investor – How Do I Achieve a Clear Title When Purchasing Distressed Property from Tax Deed Sales?

rent control keys renter rental applicationClear title to real estate often requires a quiet title process and a court proceeding. Purchasing real estate through tax deed sales can be lucrative for investors and anyone hoping to purchase a home at a discount. Just do the simple math and check out the comparable sales in the neighborhood. Tax deed sales, though, require several steps before an individual can claim full ownership of a property.

A tax deed purchase provides the buyer with bare legal title to the property, but it is not necessarily a clear and marketable title. You must consult with a title insurance company officer. Will they insure the title in its current state or do you need to take additional steps to remedy the title situation? If not, you many purchasers have to file a quiet title action to clear the title.

Follow that up with a consultation with an experienced real estate attorney. In many cases, properties that are sold through tax deed sales are also affected by other liens, including mortgage holders and prior judgment lien creditors. There could be prior IRS tax liens showing up on the title.

To obtain clear title, the buyer must complete the following step-by-step process that addresses these claims on the property. You must take affirmative action because it is your property.

  1. Read through the records provided during the delivery of the title after purchase. These records could list some liens on the property, but they are not required to list all claims on the property. Obtain a formal property profile and preliminary title report from 2 sources.
  2. Hire a lawyer and consult with a reputable title company to conduct a title search and analysis of the state of the title to the property. Conduct several period checks to see if additional items have appeared on title.
  3. Wait until the end of the time period for challenges if the title search determines that there are claims by other parties on the property. Parties with potential claims on the property are allowed only a limited   amount of time to challenge your right to the property. In California, prior title owners have one year to challenge the sale to complete a redemption. A challenge is determined through a court proceeding, and parties are limited in terms of the grounds upon which they can base a challenge.
  4. Use an attorney to file a quiet title claim with the county court in the county where the property is located. Individuals can file quiet title themselves, but it is recommended to use an attorney. If the title is in the name of an LLC or corporation or trust, you must use an attorney in Court.
  5. Pay any necessary quiet title-filing court fees to the county court clerk, and pay a process server to serve all interested parties on the title or who may claim an interest in the property. After the quiet title action is filed, you record and serve a lis pendens notice.
  6. You have the burden of proof and persuasion to prove in court your right to a superior claim to the property. Other parties with a claim on the property might not contest your quiet title claim if they do not believe they have a claim that is superior to your claim, and a tax deed purchase may provide a solid foundation for receiving clear title in comparison to most other encumbrances. Other parties may challenge your claim, and could file a counter suit or cross- complaint.    If the court rules in your favor, you have clear title to the property.

Tip for the wise: You can and should perform a title search before you purchase a property to avoid buying properties with other claims against them.  It is recommended to get a title report from 2 reputable title companies or title sources to cross-check the information and make sure you have complete title information.

If you prevail in the quiet title action and any cross complaint filed against you, then you must record the judgment in the County where the property is located.   If no party appeals the judgement or otherwise successfully challenges the trial court ruling, then you are on your way to achieving clear and marketable title.   


Copyright 2017 Nate Bernstein, Attorney at Law. LA Real Estate Law Group. All Rights Reserved.

The author of this article, Nate Bernstein, Esq., is the Managing Counsel of LA Real Estate Law Group, and a member of the State Bar of California and his practice concentrates in the areas of complex real estbio pic nate bernsteinate litigation, commercial litigation, employment law, and bankruptcy matters. The contact number is (818) 383-5759, and email is [email protected].  Nate Bernstein is a 22 year veteran Los Angeles real estate and business attorney and trial lawyer. Mr. Bernstein also has expertise on bankruptcy law, the federal bankruptcy court system, creditor’s rights and debtor’s bankruptcy options. He previously served as Vice President and In House trial counsel at Fidelity Title Insurance Company, a Fortune 500 company, and in house counsel at Denley Investment Management Company. Nate Bernstein created, a leading educational resource on quiet title real estate litigation. Nate Bernstein is a local expert on real estate law and economic trends in the real estate and leasing market, business law, and bankruptcy law. Nate has personally litigated more than 40 major real estate trials, and has settled more than 200 complex real estate and business cases. 

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