It is common for a tax deed investor to dismiss the need for title insurance on tax deed properties they do not plan on selling. But holding a tax deed property without title insurance is putting the investment at major risk of losses, or unplanned costs.
The case for getting title insurance on tax deed property an investor intends to sell is clear. Of course any investor wants to sell their property via General Warranty Deed 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?
First of all, 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.
Secondly, properties bought at tax deed auction are 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.
Think what might happen if a listed or undisclosed heir was missed during the required pre-auction noticing done by the county clerk. That leaves the door wide open for an adverse possession claim by that heir in the future, and without title insurance this could pose a risk to the investment and great financial loss if the claim is proven valid.
The same goes for a mortgage lender. 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. If a mistake was made during noticing and a mortgage was entirely missed then the bank can come forward and potentially un-do the sale if the surplus money doesn’t satisfy the outstanding lien.
This is where 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.
So, investors in tax deed property should not hesitate to get a title insurance policy whether they plan to sell or not. Because without it, the tax deed owner has 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 on our toll-free number 1-855-680-4908 or email us at firstname.lastname@example.org to find out how we are helping tax deed investors all over Florida receive insurable title with our certifications much faster and less expensive than quiet title action!
**Our sister company, Cleartofinance, specializes in refinancing tax deed and foreclosure auction real estate to free up cash for further investment or to improve existing property, allowing you to grow your capital base and acquire more properties sold at auction. Apply today online at www.cleartofinance.com or 1-866-224-7730
Cassandra August 30, 2016