In Colorado, a real estate investor can purchase a lien on delinquent real estate taxes. Upon the satisfaction of certain conditions, the investor can apply for a treasurer’s deed to take title to the subject property. A prior article explains title companies generally will not insure title based on a treasurer’s deed, but that a quiet title lawsuit can accelerate the time it takes to achieve title insurability. A quiet title action is the solution to accelerated title insurability, but what specific steps can a client expect in the process? This article will aid the potential client’s understanding of the tax lien investment strategy by providing a detailed description of the quiet title process.
When a real estate investor hires an attorney to quiet title to a property acquired by treasurer’s deed, the attorney must first procure documents from the title company and applicable County treasurer’s office to determine potential parties to the lawsuit. In some instances, the attorney may recommend, or the client may prefer, purchasing a litigation guarantee, which is an insurance product offered to “guarantee” the client has named all the requisite defendants. The necessary documents and litigation guarantee are additional expenses beyond the attorney’s fees. Collection of the title documents and/or purchase of a litigation guarantee could take several months depending on third party responsiveness.
Once all named defendants are identified, the attorney must draft the complaint for the client’s review. Once the attorney and client are satisfied with the complaint, the attorney will file the complaint with the applicable court. Filing fees and other court costs are in addition to the attorney’s fees. Preparation and filing of the complaint could take a few more months depending on the complexity of the matter and responsiveness of third parties.
B. Service of Defendants
After the lawsuit is filed, the attorney must serve the defendants with notice of the complaint. In addition to mailing the lawsuit to each last known address, and depending on the specific circumstances of the case, the attorney may advise in-person service and/or service by publication. Service by publication is available only in certain circumstances prescribed by Colorado rules. All mailing, service, and publication expenses are in addition to the attorney’s fees. The service stage could take move fairly quickly or get bogged down for multiple months depending on the complexity of the case.
In a post-treasurer’s deed scenario, quiet title actions are typically uncontested and, therefore, fairly predictable. If a defendant answers the complaint or otherwise contests the claim, however, the attorney must prosecute the matter as an adversarial dispute. Once an adverse defendant arises, the litigation budget, timeframe to completion, and eventual outcome become difficult to predict.
C. Default and Quiet Title Decree
Assuming the action remains uncontested through the service stage, then the attorney will ask the court to find the defendants in default and for a decree quieting title. If agreeable, the judge will issue an order and quiet title decree. Upon receipt, the attorney will request a certified copy of the decree to be recorded in the applicable County’s real property records. The default and decree process can take another handful of months depending on complexity of the matter and volume of the court’s docket.
D. Title Insurability
Upon completion, the attorney will present the title company with the recorded certified decree to show “quieted title” so the client can proceed with obtaining a title insurance policy. Although exact timing is difficult to accurately estimate, a typical quiet title proceeding will take no less than 6 months, and possibly up to 12 months, or more, depending on the case-specific facts, responsiveness of third parties, docket volume of the court, and workload of the attorney.
The post-treasurer’s deed quiet title action requires attentive research, adherence to specific rules, deadlines, requirements, and patience with the completion of necessary actions outside the control of the client and attorney. If all the steps are successfully achieved, the client can quickly accelerate the title insurability timeline for the property. If you are interested in learning more about pursuing a post-treasurer’s deed quiet title action, please contact Zac Grey.