What are the Risks of Purchasing a Tax Deed in Florida?

Daniel PascaleBy: Daniel T. Pascale, Esq.

Offices located in Delray Beach and Coral Gables, FL

It’s important to know that when you purchase a tax deed in Florida, that the title to the property is not immediately insurable and is not considered legally marketable. In fact, if a tax deed has been of record for fewer than 20 years, subsequent purchasers, lenders, and title insurers will not consider the title marketable and will require the tax deed holder to obtain a judgment quieting title in the holder before relying on the tax title. Thus, tax deed properties that are acquired without further legal action are essentially worthless unless you plan to rent or live in the property for the next twenty years before selling it.

Quiet Title Actions

Tax deed purchasers who don’t wish to wait 20 years to sell their newly acquired property must file a quiet title action to obtain marketable, insurable title. The purpose of a quiet title action is to forever bar prior owners, mortgage and lien holders from asserting any interest in the real property.

Because a quiet title action stops redemption periods and eliminates potential claims of lien, once the quiet title action is complete and the 30-day appeal period expires, you’ll be able to sell the property, offer marketable, insurable title to a prospective purchaser or obtain title insurance for yourself. In short, a successful quiet title action will allow a title insurance company to write a policy insuring title to the property.

Florida Statute Section 65.081 provides for the quieting of tax titles. It applies to any grantee of a tax deed issued by the state, a municipality, or other political subdivision, or to any purchaser of land that had been acquired by the state, municipality, or political subdivision through foreclosure for nonpayment of taxes or special assessments.

Outside of the tax deed context, quiet title actions can also be used to resolve ownership disputes where there is a break in the “chain of title” or it is unclear who owns the property. This lack of clarity could result from errors made in recording or executing deeds or from what is called a “wild” deed, i.e. a deed executed outside of the chain of title in a fraudulent context.

In sum, tax deeds carry an inherent risk of being declared invalid if the tax deed proceedings are later determined to be defective, this determination can be made many years after the tax deed issues. By prosecuting a successful quiet title action under Florida Statute Section 65.081, a tax deed purchaser can ensure that their investment is sound and secure. Quiet title actions can also be filed in other contexts where there are competing claims on property.

The attorneys at Jordan + Pascale excel at representing investors seeking to quiet title after acquiring a property by tax deed and at rectifying clouded titles. Although navigating Florida’s courts can be a challenge, our attorneys are dedicated to initiating and moving your case through the courts as quickly as possible. If you are new to tax deed purchases or need help with a “wild” deed, we have the knowledge and resources to serve you.