What To Do After Buying Real Estate at Tax Sale
You Just Bought a Tax Sale Property in Oklahoma – What To Do Next
When real estate investors buy properties at county tax sales, foreclosures, and other county auctions, it is often confusing to know what to do next. Here’s a helpful guide discussing what to do after buying real estate at a tax sale in Oklahoma.
Don’t have time to read the whole article and FAQ? Call or text Avenue Legal Group at 405-938-3107 to discuss your tax sale property and how to move forward today.
By law, county tax assessors throughout Oklahoma keep a list of properties with property tax debts and delinquent property tax bills. After three years of nonpayment of the property taxes, real estate is eligible for resale with the bidding typically starting at the exact amount of unpaid taxes. In Oklahoma, these sales happen every June in every county across the state. Some counties may not have any properties that actually make it to auction.
NOTE: Properties bought at the June tax sale do not have marketable title until a quiet title action is completed. This can force delays in your next sale if not cured ahead of time; banks will not fund loans to your buyers and title companies will not issue title insurance, indefinitely delaying closing.
I just bought a property at tax sale…
When do I get my deed?
Most deeds are issued within 2-3 days of the conclusion of the tax sale auction. Be sure to record your deed with the county clerk in the county’s official land records as soon as possible. In Oklahoma, the first person who files a valid claim to ownership of a property is often in a better legal position than the second or third person to record.
What type of deed do I get from the tax sale?
County officials will arrange for a “sheriff’s deed” to be issued to the winning bidder. This is a type of deed which does not offer any guarantees that title is valid, marketable, ready to sell, free of claims, etc. All tax resales in Oklahoma are “buyer beware” sales, and county treasurers recommend a quiet title to make title marketable again.
What is the status of my title?
Because the prior owner of the property could claim that the county did not properly follow all state laws regarding the tax sale auction of the property, deed ownership (title) is viewed as “unmarketable”. This means it is not commercially acceptable by title insurance companies, attorneys, and future owners.
What is marketable title?
Marketable title is the deed ownership of a property that a reasonable and prudent person would be willing to accept and that doesn’t have any significant defects. In practice, marketable title means there are not any publicly filed or recorded adverse claims against the property. The only claimed owner is the person currently claiming title.
Can I sell property with unmarketable title?
It is possible to sell property without marketable title but it is highly unlikely that a title company will be willing to close the transaction or issue a title insurance policy. Selling property with unmarketable title is a massive risk for all parties involved in the transaction. The seller should be careful to avoid offering any type of warranty (such as general warranty deed or special warranty deed) if the seller is not certain that title is good, acceptable, free from material defects, free from the threat of litigation and is marketable.
The buyer should be extremely careful when accepting a quit claim deed, which offers no promises or guarantees that the seller even owns the property. Unfortunately, it is common for parties to have informal real estate transactions in Oklahoma which causes significant title concerns for future owners and poses a serious risk of fraud for the party paying money.
How do I fix the status of my title after a tax sale?
A type of lawsuit called a “quiet title action” or “quiet title lawsuit” is the most effective way to correct any issues with the title status after a tax sale in Oklahoma. A quiet title action asks the judge to confirm that the new owner (and winning bidder at the tax sale) is the true legal owner of the property and seeks a court order determining that the prior owners do not have any interest in the property anymore.
For extremely helpful information on quiet title actions specifically aimed at resolving tax sale issues, see our article on tax sale quiet titles explained by an Oklahoma real estate attorney.
What is a quiet title action?
For an overview of quiet title actions in general, see our article on quiet title actions in Oklahoma.
Do I need a quiet title action?
Our firm can help you determine whether you need a tax sale quiet title. Sometimes, we can recommend that our clients not file a quiet title action, but the property’s title record determines what may be necessary or advisable. If your title company or our firm find an issue which requires a quiet title action to be completed, we can take quick action to begin resolving the problem.
How soon can I sell my property after I receive the sheriff’s deed?
For buyers who do not want to receive marketable title, a quit claim deed can effectuate a transaction as soon as the tax sale buyer receives the sheriff’s deed; however, this is not advisable for the seller or the buyer! Most tax sale quiet titles only take 50-75 days or less; after the quiet title is complete, the seller can sell the property to a buyer with fully marketable and commercially acceptable title.
While Avenue Legal Group moves quickly and diligently to effectively administer quiet title actions, the timing of any court action is ultimately determined by the assigned judge, the speed of the applicable county court, state statutes which may include waiting periods or response deadlines, and opposing parties.
How expensive is a quiet title action?
The cost of a quiet title action is highly dependent on the location of the property, the title issue(s) being resolved in the action, the quantity and availability of the prior owners, the complexity of the case, etc. However, most uncontested quiet title actions should range from $2500 – 6500 in attorney fees in Oklahoma; this amount tends to change with the legal market, demand from investors, and the issues unique to the property.
What if someone is living in the property I bought at tax sale?
Only an owner or agent of the owner can file to evict a resident/tenant. Many tax sale investors will buy a property and have to evict the resident after they receive a sheriff’s deed. If that’s the case, a residential eviction may be required; you can learn more about residential evictions in our helpful guide.
Due diligence services obtained before closing a transaction may help you avoid a quiet title action, or can minimize your costs after closing.
If you haven’t bought the property yet and want assistance with determining whether to purchase a tax sale or foreclosure parcel, Avenue Legal Group can help! We offer helpful and effective real estate investment due diligence services.
We work with investor clients to review seller disclosures, arrange physical inspections, review and negotiate treatments, repairs, and replacements (TRRs), review legal title documents, review liens and covenant/restriction documents, and more. If our attorneys can help you review the property details before you make a bid, we can often save you from making risky investments or help you plan and execute simple steps to protect you in the future.
A Quiet Title Attorney You Can Trust
Contact Avenue Legal Group to discuss title report reviews, tax sale quiet title actions, real estate acquisition due diligence, and other curative title services.
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