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Tax Deeds and Quiet Title


Acquiring property through tax deeds can be a lucrative business. If done correctly, tax deeds can be one of the safest and smartest ways to purchase property. Through using and understanding the correct process, investors can easily acquire title to a property free and clear of any other claims or interests at whole sale prices. It is important, however, to understand exactly what you are purchasing and the process necessary to establish your clear title.

Tax Lien to Title Chart

Tax Certificates v. Tax Deeds

In Florida, the taxing authority issues tax certificates when the owner of real property does not pay property taxes. These certificates are sold at public auction. A tax certificate does not function to transfer any ownership interest in a property; it is only a secured lien, like a mortgage. After a tax certificate has been outstanding for 2 years, the owner of the certificate may begin an application for a tax deed. The applicant must either be the holder of all other outstanding tax certificates or must redeem the remaining outstanding tax certificates when applying for a tax deed. Once an application for tax deed is completed, the tax deed is set to Auction and accordingly noticed to all interested parties. The winning bidder at auction is awarded a tax deed, which transfers the ownership interest of the property to the bidder.

Tax Deeds as Transfers

Once the Tax deed is issued, ownership of the property transfers to the tax deed holder. Upon purchasing the tax deed, the holder gains the right of possession of the property but still needs to follow the correct procedures for evictions under the Florida Statutes. Owning the property through a tax deed does not ordinarily provide you with an insurable marketable title to the property. In order to gain the right to sell the property with title insurance, it is necessary to bolster your title by filing an action to quiet title.

The necessity of a Quiet Title Action

An action to Quiet Title to the property insures that any other potential interest holders’ claims to the property are forever extinguished or barred. It is irregular for a title insurance company in Florida to issue policy on a tax deed property without a quiet title action completed first. During the Quiet Title action, one makes sure that all individuals that had any claim to the property were properly served and given the correct notices. Essentially, the action to Quiet Title serves to protect the new owner of the property from any potential claims to the property. 

What are tax Deeds Subject to?

There are very few interests that can possibly survive a tax deed. Generally, a valid tax certificate is considered a new or an original deed on the associated land. Thus, barring limited statutory or judicial exceptions, a tax deed extinguishing all other rights, interests, restrictions, and covenants held in the property. This, however, is all subject to the validity of the tax deed. When the tax deed is issued, its validity is completely depends on whether or not all interest parties were rightfully notified.  

The statutory exemptions from extinguishment are restrictive covenants that run with the land, equitable servitudes, public utility easements, conservation easements, the common-law easement of necessity, and a lien of record held by a county, municipal governmental unit, a special district, or a community development district.  The most common survival issues arise from restrictive covenants, which include the restrictions governed by homeowner associations and condominium associations. The statutes provides an exception to extinguishment of the actual restrictions, but case law currently holds that any liens for past due assessments do not survive. May purchasers of tax deeds are often sent the bill for the prior owners past due assessments, but as case law holds, the tax deed owner is not liable for these past debts. This is quite contrary to the situation of purchasing a property at a standard foreclosure sale, where the new owner is likely liable for these past due assessments.