In the past few months, several clients have contacted me with questions regarding property that had been obtained through tax deeds. For example, one client contacted me to discuss property that had been purchased from an individual who obtained the property through a tax deed sale two years earlier. At the recent purchase, the client had obtained an owner's title policy; however, there was an exception to this policy for anyone claiming by, through or under the prior owner whose title to the property had been disgorged by the tax deed sale. My client intended to develop the property into a multi-unit residential complex and wanted to be certain that they could provide clear title to the eventual third-party purchasers.
Prior to a property being sold at auction via a tax sale, several things must have occurred or, in some cases, not occurred. By way of example, let's say that “Adam” is an individual who owns a 10 acre tract of vacant land in Lee County, Florida. After the 2008 real estate crash, Adam fell on hard times and failed to pay the 2008 ad valorem taxes due and payable on March 1, 2009. On April 1, 2009, the taxes for Adam's property were deemed delinquent and the tax collector, as required by law, advertised Adam's property (along with other delinquent properties) once a week for three consecutive weeks for the sale of a tax certificate on the delinquent 2008 taxes. Once the delinquent properties had been properly advertised, the tax collector established an on-line auction for a tax certificate for the delinquent 2008 taxes.