Atlanta, GA. For years (really, years), I have posted this Question on our web site:
Question: Where can you get title insurance for Tax Sale Property?
Answer: No where in Georgia.
A curious thing is happening. In the sleepy past, title insurance companies (adverse to risk) refused to insure post tax sale properties. But that is changing.
Has the ugly ducking (unmarketable tax title) suddenly become a swan? (marketable).
In the go-go real estate days (before September 2008 and perhaps before January 1, 2008), title companies would occasionally make expectations for my presentations of a "perfect" title. It was not common.
However, this market is different.
Instead of thousands of delinquent properties and thousands of foreclosures (make that ten of thousands), there are now millions of tax delinquent properties and millions of foreclosures.
So what's happened with all the homes that have been previously foreclosed upon?
Apparently mortgage lenders are sitting on about 700,000 foreclosed homes that are not being offered for sale, according to Bloomberg. * * * Meanwhile, the blood-letting in the housing market is expected to continue. * * * Homeowners in California had the most foreclosure filings, followed by Florida and Arizona. About 8.3 million borrowers are underwater on their mortgages, owing more than the value of their home. If home prices drop another 5%, another 2.2 million homeowners will be underwater, according to data from First American CoreLogic.Number of Foreclosures Rose 30% in February (2009). Rebuild.org. March 12, 2009.
The numbers of foreclosures and unsold tax sale properties is staggering, in relation to a few years ago.
The volume alone means that the already crowded court dockets simply cannot process the volume of unmarketable post tax sale properties (the titles are unmarketable, because no title insurance is available for the title).
Capitalism, being what it is, has finally moved to fill the void and overcome the risk associated with tax sale properties.
While the particulars still seem a bit murky (even to one who has been doing this for awhile), a number of very large title companies are quietly writing title policies. The polices are time consuming, require significant documentation and are substantially more expensive than an ordinary title policy issued at closing, but - for the first time - they do exit.
The emergence of this alternative to a lengthy and time consuming quiet title action (“QTA”) can only be a benefit to investors who are bogged down with valuable, but unmarketable, tax properties.
If you have a tax property (Georgia or elsewhere) that you would like to insure, email or call us. Perhaps the time has finally arrived to insure these previously uninsurable properties.
Hugh C. Wood, Esq.
Wood & Meredith, LLP
3756 LaVista Road
Tucker, GA 30084
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Tuesday, July 28, 2009
Title Insurance Now Available For Tax Sales
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