Legal Question in Real Estate Law in California

When the property is sold to the state [the county is a subdivision of the state], it wipes out all liens on the property, except for Federal or State liens. When you buy at the auction, you get the property subject only to federal tax liens. While the former owner has a year to challenge the sale, normally when a mistake is made the property gets withdrawn before the sale occurs. But Title Companies do not like tax deeded property although it has the best title possible.

A quitclaim deed means you are giving up your claim to the property; you would not file one.

I agree with Mr. Shers.

A sale of property at a tax foreclosure sale conveys title free and clear of any encumbrances, except liens for taxes and assessments. �The deed conveys title to the purchaser free of all encumbrances of any kind existing before the sale �.� (Rev. & Tax. Code, � 3712.) The sale would wipe out the lien of the abstract of judgment as to that property.

An owner has a year to set aside the tax foreclosure sale. �A proceeding based on alleged invalidity or irregularity of any proceedings instituted under this chapter can only be commenced within one year after the date of execution of the tax collector�s deed.� (Rev. & Tax. Code, � 3725.) The same one-year rule applies to a party asserting invalidity of a tax sale as a defense. �A defense based on the alleged invalidity or irregularity of any proceeding instituted under this chapter can be maintained only in a proceeding commenced within one year after the date of execution of the tax collector�s deed.� (Rev. & Tax. Code, � 3726.)

A title company may not want to issue a title policy to a buyer or lender during the one year period after the tax foreclosure sale, because they do not know whether or not the former owner will have grounds to set aside the sale. That's because sales are set aside for defects in the notice procedure of the sale, and that is not something that is a clear matter of record in the recorded documents. But that doesn't mean the property could not be sold, it just means it would be difficult to sell.

I'm not sure why you reference a quit claim deed, or who you would quit claim it to.

I agree that the abstract of judgment will not affect a successful buyer at the tax sale. While the likelihood that the tax sale will be challenged or the property redeemed by the former owner is slight, in your analysis of the economics of purchasing and re-selling the property should be built around a planning assumption that it will take at least a year to unload the property at a price that does not reflect a risk element.