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Question of the Week: Quitclaim & Quiet Title

This question comes from someone who bought a tax deed from the State two months ago, found the former owner, and wants to obtain a quitclaim deed from that person. The investor asked, “If I get a quitclaim deed, can I file my quiet title lawsuit right away, without having to wait three years?”

The answer is that the quitclaim deed gives him the owner’s redemption rights. Afterwards, those rights no longer exist since the tax deed and the redemption rights kind of got merged into each other, and now only the deed survives and is the winner. Quiet title lawsuits are to get rid of other people who might have rights in the property. The quitclaim deed does that all by itself, assuming there are no other owners and no lienholders. A quiet title lawsuit is not even necessary.

If there are lienholders, the investor might have to send out the certified letters and wait one year from RECEIPT (not from date of mailing) to clear out those redemption rights. After the year, the investor can file the relatively fast and cheap and easy in personam quiet title lawsuit. No guardian ad litem (GAL) is required because the GAL represents the interests of the unknown defendants. If all of your defendants are known and you can serve lawsuit papers on them, there is no need for a GAL.

In the question I received, there were no lienholders and no other person with ownership rights. In that case, with a quitclaim deed, the investor is good to go. I told him to approach a title insurance company to get title insurance on the property. That way, if there are any surprises, he learns about them BEFORE he gets ready to sell or finance.

Do you want to learn more about easy tax sale strategies to make wise decisions, avoid problems, and speed up the process? Check out the Alabama Tax Sale Investing introductory course, available live at locations around Alabama or over the Internet. Click HERE

What do you think?