Because courts may be sympathetic to an owner that lost his property for pennies on the dollar, and as equity abhors a forfeiture, tax sales, are often set aside. The slightest defect in the tax sale may cause it to be vacated. The procedures or the implementation of procedures for a sale of real property for non-payment of taxes and the validity of tax sales are often attacked even if a sale was held in strict compliance with all state and local laws based upon failure to give proper notice as required under the Due Process Clause of the United States Constitution. For these reasons it is the policy of the Company not to insure property where the title search reveals that the title is derived from a tax sale that occurred less than twenty years before the effective date of the search.
The company will consider exceptions to this policy on a case-by-case basis. Please contact Agents National Title’s local counsel for guidance. In general AGENTS NATIONAL TITLE guidelines will be as follows:
1. The tax deed has been of record at least 20 years or the time required to gain title by adverse possession;
2. A review of the tax assessments and collection records has determined that the state and local tax laws have been strictly complied with;
3. Delinquent taxes were not paid by the dispossessed former owner prior to issuance of the tax deed;
4. Evidence is obtained and recorded in the records verifying that the taxes are paid and current and further verifying the continuous payment of the taxes by the tax deed grantee or successors in title for at least 20 years or the time required for adverse possession;
5. Subsequent to the tax deed there has been no possession adverse to the tax deed grantee or his successor in title;
6. That the tax deed purchaser or his successors have held exclusive possession of the property for at least the minimum required to establish adverse possession;
7. A review of the tax sale proceedings (which must be a judicial proceedings) must reflect strict compliance with the notice requirements of the Due Process Clause of the U.S. Constitution as set out under Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950), as expanded by Mennonite Board of Missions v. Adams, 462 U.S. 791 (1983), and its progeny, i.e., notice to affected individuals must be reasonably calculated, under all of the circumstances to apprise interested parties of the pendency of the action and afford them the opportunity to present their objections; or
8. A deed from the former dispossessed owner to the tax deed holder conveying title along with a release from all mortgagees and lienholders; or
9. A final unappealable order from a court of competent jurisdiction quieting title
10. In the tax sale purchaser or his successors in a case in which the summons and complaint was personally served on owner that lost the property at the tax sale as well as on all mortgagees and lienholders.
With items 1-7 above, the Company may also require the execution of a ratification by the original dispossessed owners. Contact Agents National Title underwriting counsel for written authorization before insuring any transaction which contains a tax sales in the chain of title.