Buying foreclosed tax-sale residential property can seem like a “get rich quick” scheme. You think all you have to do is buy real estate at a tax sale for the amount of unpaid taxes (plus a few other costs), and within 12 months, voila! The property is yours. You put up a “for sale” sign and make a lot more money than you paid for the property.
Not so fast.
Not only are there specific timelines and procedures you must follow to terminate the property owner’s right of redemption after a tax sale (to be covered in other posts), but before you can sell the property, you have to “clear title.”
Tax Foreclosure Sales and Georgia’s Quiet Title Act
One thorny problem that arises when purchasing real estate at a nonjudicial tax foreclosure sale is that before you can sell the property or use it as a security interest, you need to bar the right of redemption of the owner who didn’t pay taxes and any party who holds an interest in the property.
Another problem is that even after you have barred the non-tax paying owner’s right of redemption, generally, if there has been a nonjudicial tax sale on the property within the past 20 years, most title insurance companies won’t title insure the property.
Which means that you may need to bring a quiet title action to obtain clear title to the property. (NOTE: Because quiet title actions are important and complicated, they cannot adequately be discussed in a blog post. Therefore, if you have purchased property at a nonjudicial tax sale in Georgia, we suggest that you consult with experienced real estate counsel.)
Georgia’s Quiet Title Act of 1966 authorizes two statutory types of quiet title actions. They are:
- a “conventional quia timet” action and
- a “quia timet against all the world”.
(Quia timet, is Latin for “because he fears or apprehends.” (Black’s Law Dictionary (5th ed. 1979).)
A conventional quia timet proceeding is an equitable action. It essentially is an action that seeks to cancel an instrument that either casts a cloud over the complainants’ title or otherwise subjects him to future liability or present annoyance.
In a conventional quia timet action, the complainant is required to prove possession of the property.
A quia timet against all the world, on the other hand, creates a procedure for removing any cloud upon the title to land, including the equity of redemption by owners of land sold at tax sales. Unlike a conventional quia timet, it does not require the identification of a specific instrument clouding title and once title is cleared, it binds “all the world.”
Experienced Real Estate Counsel in Georgia
If you need real estate advice, contact us. We are experienced real estate attorneys practicing in Georgia. We have offices in Cumming and we serve Atlanta and multiple counties, including: Clayton County, Cobb County, Dekalb County, Douglas County, Fulton County, and Paulding County, among others. To schedule your free phone consultation, call us at: 770-888-7707. Or contact us here.