The court faced a big mess. Between the time the parcel was offered for sale at the tax sale and the non-profit acquired title from the City, a lot happened to muddy the waters. The prior owner filed for Chapter 13 bankruptcy during the redemption period and prior to the City obtaining its tax deed; the City erroneously voided the tax deed, re-offered the parcel at the 2011 tax sale, withdrew the parcel from the tax sale and re-applied for and obtained a tax deed; and the City erroneously accepted over $6,000 from the prior owner purportedly to redeem the parcel from the 2011 tax sale. The non-profit intervened in the litigation. Its interest in the parcel was in jeopardy and all because of events that had transpired between the City and the prior owner.
In the end, the court upheld the validity of the tax deed and the non-profit kept the parcel. But to get that result, the parties no doubt expended a lot of time and money in litigation costs. With this case in mind, it is no wonder that most title companies refuse to insure title vested through a tax deed. There is just too much risk. Not only is there the risk that title will be voided, for example, if the procedural requirements of the tax sale statute were not followed but there is also the risk of costly litigation to defend the title, even if that litigation is ultimately successful. A purchaser of a parcel recently involved in a tax sale should seek legal advice to understand and sort out these risks.
Author: Partner, Eric W. von Deck, is civil litigation, personal injury, insurance defense, and real estate attorney at Tuesley Hall Konopa, LLP. He also litigates family law matters such as divorce and child custody, and support issues.
You can contact Eric by calling 574.232.3538 or by email email@example.com