Do I Need to Hire a Tax Lien Attorney for Quiet Title?

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If you purchased a tax lien or tax certificate in a state that does not have a strict judicial foreclosure process, then your more than likely going to need to hire a tax lien attorney to file for quiet title if your lien does not redeem.  However, this step is not always required.  It really depends on what you are going to do with the property. 

 

What is a quiet title action?

An action for quiet title is a lawsuit that you, as the tax deed recipient, file with the court to eliminate any future title claims against the property and remove what’s called the “cloud on title”.  Tax deeds are the least defensible form of ownership for a property.  The taxpayer or mortgage company on the property could claim that they were never notified that they owed taxes.  Many times, there may have been a death of the property owner and the heirs never realized they lost the house for taxes.

To eliminate such problems, a tax lien attorney will file an action to quiet title (or some other equivalent action depending on the state).  If the action is successful, a judge will rule in the favor of the tax deed holder and eliminate any interests or claims of those served as defendants to the lawsuit.

Do I really need to hire a tax lien attorney and file?

It depends.  The question you should really be asking is “do in NOT need to file for quiet title?”  Here are the most common reasons why you wouldn’t need to file:

1. It’s a judicial foreclosure state.  In those states such as New Jersey, Maryland and DC where a foreclosure must be filed and a judge rules on the case, you do not need to file a quiet title. The final judgment issued by the court is enough to defend against most title claims.
2. You can find a title company to insure a sale.  There are some services and title companies who will do manual underwriting of the property.  You’ll pay a few thousand dollars to have them do this, but in the end, they will check to see if the notifications were done appropriately, then issue a title insurance policy to you and your buyer.
3. You’re not planning on selling the property. If you feel pretty confident that all of the required noticing was done correctly and you don’t want to sell the property with insurable title, there’s not requirement to hire a tax lien attorney for quiet title.  You could rent the property or sell the property with no warranties.  There is risk in doing so!  You may find yourself in a legal fight if someone does come forward.

What happens when I file for quiet title?

First, your tax lien attorney will order a title report that shows anyone of record that has a legal interest in the property.  This costs $100-$300 plus attorney fees depending on the state.  Your attorney will then serve notice on everyone on title plus usually the property address and occupant, if any.  At the same time, the lawsuit is entered in the court.  If no one responds, then the judge will issue a default judgment quieting the title.  Total time varies depending on how backed up the court is but averages between 3-9 months. Work out costs with your attorney beforehand—it should only cost $1000-$4000 depending on your state and filing expenses.  If someone does respond, then the attorney will evaluate a response.  Outcomes vary—listen to your attorney’s recommendations as he or she will know what the best strategy is to either continue to push for quiet title or work out a settlement (maybe even for a nice gain).

A quiet title does not eliminate all liens or problems.

Remember that tax deeds do not wipe out most government liens and subsequent taxes.  You’ll still be responsible for municipal fines, accrued taxes and other liens recorded on the property.  Also, the quiet title judgment isn’t completely infallible and has been overturned in rare circumstances.  Be sure your tax lien attorney has experience with filing quiet titles.