Have you recently purchased a property at a tax auction in Oklahoma? If so, you will need to do some legal work to clean-up the property’s title. If you don’t you will find yourself having trouble when it comes time to flip it or refinance it.
We can help you solve this problem, as we have many times before for other Oklahoma investors.
Why does a property have bad title when you buy it from a tax auction in Oklahoma?
To understand why your tax deed may not be enough, you first need to know this basic aspect of real estate law.
Buying and selling real estate is all about who owns the property and has a right to sell it. To legally determine who owns a piece of real estate, you must review the historical record from each grantor to grantee. A lawyer’s title opinion involves looking at how each transaction was completed for the entire history of the property.
Lawyers, judges, banks, and title companies will want to know if there were any irregularities in any of these grantor-grantee transactions. If there are irregularities, or if procedures were not followed, the title could be invalid. This is called having a cloud on title. And to remove a cloud on title, you must go to court.
When you buy a property at a tax auction, you are purchasing it from the treasurer. In order for the treasurer to become the lawful owner, it had to follow certain legal procedures. There are procedures required by Oklahoma law to allow the county to seize a property for delinquent taxes. There are also constitutional rights involved when the government seizes real estate from a US Citizen.
Most banks and title companies are hesitant to rely on title that came from a county treasurer. There are just too many risks involved. It’s too risky to rely on a county government to have followed every constitutional protection required. Therefore, these institutions typically require that you hire a lawyer to “clean up” the title on any deed acquired at tax auction.
Real estate lawyers, as a whole, take the position that you must clean up any ownership acquired by tax deed. Every year the Oklahoma Bar Association publishes Title Examination Standards for lawyers who work for banks and title companies to follow. In the 2024 edition, they recommend not recognizing ownership acquired by tax deed unless the tax deed has been on record for at least ten years.
So what do you do if you purchased a property at a tax auction within the last ten years? The solution is to obtain a court order clarifying you as the record owner of title. This should be done before the property is thereafter sold or refinanced.
How do you fix the title after buying it at tax auction?
In order to fix your title issues on your new property, you need to hire a lawyer to “quiet the title” in the county property records.
This means your lawyer will file a lawsuit for you against other people who previously owned the real estate. This involves searching the history of title, and determining any outstanding ownership claims. After identifying the unresolved ownership claims, the lawsuit asks the judge to clarify the true owner of the real estate as being you. The final outcome of the lawsuit is getting a court order that replaces the previous owner’s name with your name.
The phase “quiet title” refers to a judge silencing any other person from claiming they own the real estate. This is exactly what you need after you purchase a property at a county tax auction. Once you have obtained a court order that quiets title in your name, you will be able to do business with banks and title companies.
Filing quiet title lawsuits is a routine legal service that we provide, that serves a common need in the real estate industry.
Hire a real estate lawyer to fix your title problems in Oklahoma.
Travis Charles Smith has been involved in real estate law in Oklahoma since 2009. If you would like to schedule a consultation, call us at 405-607-7799 or send us an email here.