The Deal of a Lifetime… Or a Legal Nightmare?
It is late January, and many Michigan real estate investors are scouting their next projects for the Spring market. You find a distressed property in Detroit, Pontiac, or Flint. The price is unbeatable—maybe you bought it at a tax auction, or perhaps you purchased it via a simple Quitclaim Deed for cash.
You are ready to start renovations. But before you swing that hammer, there is a crucial question you must ask: Do you actually own the property?
In the eyes of a title insurance company, the answer might be “No.”
At The Law Offices of Aaron D. Cox, we frequently see investors spend tens of thousands of dollars renovating a home, only to find out they cannot sell it or refinance it because the title is “clouded.” Here is how to fix that.
1. The Problem: “Clouded” Titles
When a property goes through tax foreclosure or changes hands via informal Quitclaim Deeds, the “chain of title” is often broken.
- Tax Sales: Even if the county issued you a deed, title insurance companies generally will not insure tax sale properties immediately. They fear the previous owner might sue later, claiming they weren’t properly notified of the taxes owed.
- Heirship Issues: Did you buy a house from the son of a deceased owner? Did the other three siblings sign off? If not, they may still have a legal claim to the home.
2. The Solution: A Quiet Title Action
A Quiet Title Action is a lawsuit filed in the Circuit Court to establish your ownership once and for all.
- The Goal: The court issues a judgment that “quiets” (removes) any challenges or claims from previous owners, banks, or lienholders.
- The Result: With a Quiet Title judgment, you can obtain full title insurance. This allows you to sell the property to a conventional buyer (someone getting a mortgage) or refinance it yourself.
3. Timing is Everything: Do It NOW
A Quiet Title action in Michigan is not an overnight process. Depending on the court’s docket and the complexity of the case (e.g., locating missing heirs), it can take 3 to 6 months.
The mistake many investors make: They wait until the renovation is finished to check the title.
- Scenario: It is June. The house is beautiful. You have a buyer ready to pay $250,000.
- The Crash: The buyer’s mortgage lender orders title work. The title company refuses to insure the deal because of an old tax lien. The deal falls apart.
The Smart Strategy: File your Quiet Title action now (in Winter). By the time you finish your Spring renovations, the court process will be complete, and your title will be clean and marketable.
4. Can You Do It Yourself?
Technically, yes. Ideally? No. Quiet Title actions require strict adherence to procedural rules, including proper service of process to all potential interested parties (even those who are hard to find). If you miss a step, the title company may still refuse to insure you, forcing you to start over.
Protect Your ROI
Don’t pour concrete into a property you don’t fully control. If you acquired a property through a tax sale, land bank, or quitclaim deed, let us clear the path for your profit.
Contact The Law Offices of Aaron D. Cox, PLLC today to start your Quiet Title Action.