[WSBARP] Sale of Property Purchased at County Tax Sale

Thu Jan 21 10:33:31 PST 2016

The nuggets of wisdom espoused by John and Dwight on this listserv alone is
worth the price of admission to the RPPT and why I think the WSBA Staff is
wrong about the Sections.

*Robert R. Rowley* | Attorney at Law

7 S. Howard St, Suite 218

Spokane, WA  99201

Telephone: (509) 252-5074

Mobile: (509) 994-1143

Facsimile: (509) 928-3084

Email: rob at rowleylegal.com

Web Site: www.rowleylegal.com

*From:* wsbarp-bounces at lists.wsbarppt.com [mailto:
wsbarp-bounces at lists.wsbarppt.com] *On Behalf Of *Bickel, Dwight
*Sent:* Thursday, January 21, 2016 10:09 AM
*To:* WSBA Real Property Listserv
*Subject:* Re: [WSBARP] Sale of Property Purchased at County Tax Sale

I agree with John McCrady’s recommendations that would reduce the risk of a
challenge to the validity of a tax sale and increase the likelihood that a
tax sale purchaser could obtain title insurance for a new loan or next
purchaser. However, attorneys giving advice about future insurability
should not rely upon those, or three years, as absolute assurance that
title insurance will be offered.

A voluntary deed from all people whose interests were foreclosed is the
best method to eliminate a challenge to the validity of a prior tax sale.
There is still a risk of challenge from prior lienholders, which may be
accepted by a title company if the service of process is perfect. Other
than a deed, John’s other suggestions might not be acceptable to a
particular title company.

A quiet title decree is only significant reduction of the risk of a later
challenge to the prior sale if there is actual service of process on the
prior owners. Just like the prior foreclosure itself, a QT Decree based
upon only service by publication, does not extinguish the risk of
subsequent challenge based upon lack of process.

On a couple occasions I have accepted an attorney opinion letter regarding
the effectiveness of the prior tax sale (valid procedures and propriety of
actual service on all parties). An opinion letter, or the Certification
from Tax Title Services, only reduce a small portion of the risk based upon
compliance with the foreclosure statutes and may not be enough to convince
a title company to assume the risk. The duty of defense provided by title
insurance is extremely expensive to the title companies even if the tax
sale purchaser succeeds. Would you advise your client who purchased at a
tax sale, and who does not have a title insurance policy, to give a
Warranty Deed to the next purchaser? Well, neither would I.

Other than a deed from all persons who held ownership at the time of the
prior tax sale, or a QT Decree based upon actual service of process, the
most reliable risk reduction is TIME. *However, be aware the most relevant
statutory time period is SEVEN years, not three*. Hundreds of times I have
told customers and attorneys that they may not be able to obtain title
insurance based upon the validity of a tax sale until they have possessed
the property and paid all the taxes for seven years.

The three-year period provided by RCW 84.64.070
<http://apps.leg.wa.gov/rcw/default.aspx?cite=84.64.070> is not a
redemption period, nor a statute of limitation to a challenge. It provides
a right to set aside a tax sale only for minors and incompetents.

People who have lost their property by tax sale can challenge a tax sale on
any basis later than three years if they can challenge the procedures or
the service of process of the county. In my experience, if they lost
substantial equity, a Judge will be motivated to find a basis to reopen the
case, whether the case is the tax foreclosure or a subsequent QT Decree,
based upon procedural due process. Setting aside an Order of Default based
upon service of process by publication should be easy. Note that if a tax
sale is set aside, the purchaser at the tax sale has no recovery from the
county.

*See* RCW 7.28.050 <http://apps.leg.wa.gov/rcw/default.aspx?cite=7.28.050>
as a bar to a subsequent action to challenge a prior tax sale based upon
open and notorious possession for seven years. *Also see* RCW 7.28.070
<http://app.leg.wa.gov/RCW/default.aspx?cite=7.28.070> [with actual
possession] and RCW 7.28.080
<http://app.leg.wa.gov/RCW/default.aspx?cite=7.28.080> [applicable to
vacant land] as bars to any subsequent action claiming title for any reason
if the other person claims pursuant to “color of title” [the tax sale deed]
and payment of taxes for seven continuous years.

*Dwight A. Bickel*

Regional Counsel

Fidelity National Title Group

Legislative Committee Co-Chair

Washington Land Title Ass'n

701 - 5th Avenue, Suite 2300
Seattle, WA 98104
Phone: (206) 370-3189

E-mail: Dwight.Bickel at fntg.com <blocked::mailto:Dwight.Bickel at fntg.com>

copies:  Jim Blair, Legislative Committee Co-Chair

            Stuart Halsan, WLTA Lobbyist

            Dave Lawson, WLTA President

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