REtipster does not provide tax, investment, or financial advice. Always seek the help of a licensed financial professional before taking action.
Brenda Flatter is the VP of National Sales for US Tax Deed Solutions and Executive Director of National Title and Settlement Services for Title & Abstract Agency of America.
I met Bren recently through a mutual connection, and after hearing about what she specializes in, I thought her services were quite relevant to the world of land investing.
If you've worked as a land investor, you've probably encountered your fair share of properties with a tax sale in their title history.
Tax sales create a problem in a property's chain of title (for reasons we'll discuss in this interview), and US Tax Deed Solutions has an interesting way to solve the problem faster and cheaper than getting a quiet title action.
Links and Resources
- US Tax Deed Solutions
- What Is a Quiet Title Action?
- What Is a Quit Claim Deed?
- How Does a Title Search Work?
- What Is a Cloud On Title?
- 134: SCAMMED! When Someone Tries to Steal Your Property, What Can You Do?
- My Experience at a Tax Deed Action: Is There Any Opportunity Here?
- A Crash Course in Tax Lien and Tax Deed Investing (And My Love/Hate Relationship With Both)
Seth: Hey everybody, how's it going? This is Seth Williams. You're listening to the REtipster podcast. This is episode 143.
Today I'm talking with Bren Flatter from the US Tax Deed Solutions. I met Bren, or I got connected with her not long ago. We had this meetup in Orlando about a month or so ago where I met Keith and Rachel, and they told me about Bren.
We got connected and had a conversation with Bren about what she does and just her whole process of what's involved. And I thought, “You know what? This is relevant. This is something that all the land investors and really anybody out there who's buying super cheap discounted properties, people are going to come across this at some point. It's worth being aware of what this is and how it works.”
So, Bren, before I get into it much more, why don't you explain what is US Tax Deed Solutions?
Brenda: Sure. Well, first of all, thank you very much for having me today. I'm happy to be a part of it. And like you said, this is a niche product and a small space, but I think it's definitely something that somewhere along the line if somebody's investing in real estate, they're going to come across this.
US Tax Deed Solutions, we fast track the insurability of tax deeds without the quiet title action. Historically all 50 states have a tax sale but based on how their statute is written in their process, some of them are able to go to title insurance immediately, and then many of them have to have an extra step called the quiet title action that's completed. That's judicial, ran through the court, and can take anywhere from three to six months if it's non-contested based on the court's docket.
And what we've done is we've gotten with a national underwriter, and we have a product that we will ensure that tax deed without the quiet title action in our review period usually, we target 10 business days. In essence, you can have a tax deed in the chain of title; either you're insuring it to yourself or you're going to insure it to your end user. And we could probably, in a perfect scenario, get you to the closing table in 15 business days from the date that deed is recorded.
Seth: Gotcha. And for those who may not be familiar with this super basic stuff, what is a tax deed sale and why does this create a problem at all in the chain of title? Like why is this an issue that needs to be resolved?
Brenda: Oh, great question. How a property becomes eligible for tax sale is going to depend on this state as to how many installments they will have to miss in order to qualify for the county to then put them up for tax sale.
For example, in Indiana, it's three installments. So, you're a year and a half past due on your property taxes, then the county would do a notice letting you know that you've been certified, that if your taxes aren't paid by X, then you're going to go into the next county tax sale. And then from that it just then would depend on that state, whether it's a lean sale, then they'd go through a redemption period.
And then if in the redemption period, nobody redeems and then that lean certificate holder then goes to deed, then title insurance underwriters view those as high-risk properties because many of these need the quiet title action, it's not a judicial process.
The county has sent notice to the owner of record and any interested party in that property letting them know that the property is eligible for tax sale or that it's been sold at tax sale and they have the ability to redeem it for a certain amount of time. Then they also send them sometimes another notice saying, “We're making an application for deed. You've got one last chance to redeem your property back.”
And then in the event that nothing happens and they do make an application for deed and it's signed and now they're holding a tax deed, the title insurance underwriter just views that as very risky because it's all based on notice of whether it be direct mail, certified mail, publications.
And so, because of that, they require the quiet title action. It's judicial. Like I said, ran through the court, and then that gives any title agent or underwriter the comfort level needed to ensure that tax deed.
Seth: It sounds like technically a tax deed sale is supposed to wipe out the title history, but it actually creates a problem because they can't really verify that all the people were notified correctly. And because they can't verify it, it actually creates a cloud on the title.
Brenda: Yeah, absolutely correct. The way the statutes are written, you have a clear title at the issuing of the tax deed, but in the title insurance world, in the real estate world, you don't have a marketable title because there's a cloud on the title.
Now when the tax deed is issued, mortgages are extinguished, judgments are extinguished, mechanics liens are extinguished. Municipalities, they survive the tax deed and they would also survive a quiet title action. So, think of it as in the government always gets paid, everybody else may lose out.
But yeah, because of that process there are things that extinguish, but then some things that do not. And again, they do require that additional step.
Seth: Gotcha. And like you alluded to earlier, one way to resolve this issue is a quiet title action. It's like a court action where basically notifies everybody and you clear everything out. What does it typically cost for a quiet title action? Do you know off the top of your head?
Brenda: Yeah, I do actually. And it's going to be a national number. Generally, you can spend anywhere from $1,500 to $5,000, and that's for a non-contested quiet title action. It varies by state. Some attorneys that actually work in this field, if you have a lot of volume, sometimes I know that they might adjust their fees a little bit, but there are some hard costs, whether it be court filing fees, publications, certain things that have to be done per statute that there's no wiggle room in the price.
But yeah, I would say nationally the average is around $3,000, but anywhere from $1,500 to $5,000 is what I found in my research.
Seth: And how long does it typically cost to go through that whole process?
Brenda: You're going to be at the mercy of the court docket, but typically it's around three to six months. Again, if it's not contested.
Now I have had a couple clients that have had them contested and they dragged out for 18 months. And like you just mentioned before, it is a noticing process. And that's one of the things that we take a look at when we're doing our review and our deep dive into this property to see if we're willing to assume the risk. Because the quiet title action in essence is one more go around of noticing to everybody that was involved.
And when I just mentioned that you get the pre-sale notice to the owner of record, then you get the noticing throughout the way to the parties involved. So, these people probably have had five to six notices throughout this time period based on the state that there's an issue here.
Our stance is if everything was done and handled properly the first time, then we'll take a look at it and it's maybe a risk we're worth assuming versus going through the quiet title action. And this was a game changer for many people in the industry because they were just always used to doing the quiet title action.
And still, to this day, I've had this product and have been doing it for about 16 years and it's still a time where I might run into a realtor that's never heard of it or another title agent that isn't very familiar with us and they're just adamant that that's the only way this can be done. But really, there's other options out there for folks.
Seth: And the time of you getting involved to see if you can find a solution, how much time did you say that takes?
Brenda: Sure. Our review time, we target 10 business days in order to get the review completed. Sometimes that does carry on a little bit further because if we're waiting on documentation from the county. Some counties are really fast about giving us what we need. Some are a little slower. But if we have everything married up correctly or like we like, then our review period is 10 business days.
Then if we've reviewed the property and we've said, “Hey look, we can verify it”, then it's just a normal real estate transaction from there on out. Probably closing within three to five business days if it's a cash transaction and there isn't maybe any title of curative that needs to be done after the fact.
Seth: And what is the cost of getting this done compared to a quiet title action?
Brenda: I'll just start with the smallest price point, because I probably think I see this the most right now in the current economy. Zero to $25,000, our price is $1,450. That's $1,450. We require $350 upfront to do the initial review that's non-refundable. But then we really do work very hard to get these properties verified. And then either we verify it and we go to the insurance piece.
Now there are times that we will do supplemental noticing at no additional charge if we feel like somebody wasn't notified correctly or maybe the proper address wasn't used for the statute. And then that would delay you another 30 days, but then after that, we could verify and go to closing.
One of the things that we've instituted recently is we've had to do some skip tracing. There are certain parts of the country where there are a lot of probate issues, deceased parties that own property that didn't tell the family members or the family members didn't know. And so. we've had to do some skip tracing and that's added on an additional fee for our skip tracing company in order to handle that part. And then sometimes it just delays us a little bit more.
And then the worst-case scenario is we come back and we'll just say, “Too much was missed or there's a very multitude of things that could go wrong.” But we do provide you a title report at that time to take to an attorney to do the quiet title action as well as we have attorney recommendations for each state.
It's not like we leave you hanging out to dry, go find someone. We have some people that we've already worked with, embedded that they're proficient and they're knowledgeable in that state, and that can handle the quiet title action if somebody doesn't have that counsel.
Seth: That $350 non-refundable fee to start the review. If you find out that “Yep, it does need a quiet title action”, that $350, is that kind of just gone then at that point? You spent $350 to see if it can go faster?
Brenda: Well, not necessarily. Because I'm giving you a title report at the end and if you would contact an attorney, he's going to contact somebody to start a title report and those can run around $300 to $400 anyways.
So, you're really not out any money, you're just trying to see if you can go faster.
Brenda: Because we do give you something of value in order for that next step. And then after that, if we've done the report, you go do the quiet title action, we hope because we've connected you and we've provided you the information that you'll come back to us to handle the title and closing piece because of the subsequent title company that it's affiliated with.
Seth: Gotcha. It sounds like there are some efficiencies at work here because you can do this review and be the title company that closed the thing.
Brenda: Oh, 100%. Because your verification isn't any good if you can't find somebody to insure it. And so, Title & Abstract Agency is the title company that we're a part of that allows us to, US Tax Deed does the verification and then we come back to Title & Abstract Agency to handle the closing. So, it makes it a very seamless process for us to handle.
And we're currently doing it in nine states and growing. But we're currently in nine states.
Seth: And which of those nine states?
Brenda: Sure, I'm going to give them to you in order of how we developed, not in alphabetical order. Indiana, Michigan, Colorado, Arizona, Florida, Missouri, New Jersey, Mississippi, and Alabama.
Seth: Did I hear you working on Arkansas right now too?
Brenda: Yeah. And we're pending in Arkansas. Yeah.
Seth: Is the goal to eventually work everywhere or are there certain states that you will just never go to because it doesn't make sense or it's not possible to do this?
Brenda: Yeah. Some states, the way the process is done through the tax sale, it's more judicial and a quiet title action isn't needed. Then the next part that I look at is “What states is the quiet title action needed and then how does that statute read?”
Because some states, Florida for example, the tax need can be challenged for up to four years after the tax deed is issued.
Insurance is a risk business and that's one of the things that we're taking a look at. Are we willing to assume this risk and what are we willing to do? And making sure that everybody's protected because we feel very passionate about title insurance and title and protecting people's property rights. We just want to make sure that does happen.
Seth: Yeah. And I know the need for a quiet title action, that can be a lot of different reasons for that. Sometimes it's a tax deed sale, sometimes it's something totally different. Do you do anything else besides this one issue or is it just tax deed sales in the history, that's the main thing that you attack?
Brenda: Well, if somebody does have a real estate deed and they need a real estate attorney or a counsel, I'm happy to recommend and I can direct them in that manner.
For our purpose of bypassing a quiet title action, it's solely for a tax deed property. Because you are correct. There are times when a quiet title action is recommended to cure something and with a property but ours is just purely focused on the tax deed.
Seth: Yeah. And I know for the land investors out there, if you've ever bought a dirt-cheap lot or if that's something you regularly do, you almost certainly have come across this at some point where either the person you're buying it from bought it at a tax deed sale or maybe there's a tax deed sale a few transactions back. And maybe it's because of just the nature of the property. It's just not a super desirable one or for whatever reason people are letting the thing go.
And it sounds like this isn't just for people who have a tax deed sale immediately prior to the person they're buying it from, it could also go back, like several transactions. If there's any tax deed in the history, you could potentially resolve that too, right?
Brenda: Oh, absolutely. And that's one of the concerns I hear about. “Well, it's just this little lot. It's just this $3,000 lot.” Well, okay, you got a $3,000 lot. For me, as a title agent, what's next? Are you putting a $200,000 house on there? You put in a million-dollar building. What's next is kind of what matters.
And like you said, when people have low dollar properties, in vacant land especially, I don't think they're as inclined to go through a title company and obtain title insurance because sometimes the cost affects their margins and they're just going to run the risk.
Because I'm sure you and I both know people that buy and sell quit claim deeds and handshakes and hand them cashier’s checks on the corner. And they do that a few times and then all of a sudden somebody's wanting to build or lend on it and “Oh, wait a minute, you've got this caveat here of a tax deed in the chain.” Because you are correct, it's not just the first tax deed person, it's in the chain of title. So, we have to go back and we have to remedy those.
Since we're talking about vacant lots, because of the vacant lot increase, we started a special tier for zero to $10,000 vacant lots is $1,000 to do the verification. It's $350 upfront, $650 at the time of a policy being issued where we lowered that price in order to capture some of those people that I know probably have a tight margin but yet we can still help them in protecting their property rights and getting it cleared but yet it not affects margins as much.
Seth: Yeah, for sure. I'm sure that helps a lot. And sometimes this can be the one and only issue that's holding up the deal. It's like this one problem. It's just good to know that there is an option B in some cases where you don't have to wait months, and you don't have to spend $3,000. It's just really good to know about this.
Brenda: Yeah. And I feel bad because a lot of people when they see the infomercial in the middle of the night or they read and they Google and they start looking at tax deeds, you have to really almost cipher through the information you're reading because some of it's not disclaimed, some of it is not provided, there's this extra step.
I've had people that bought it at a sale, got a deed, and were quite angry and would say, “Well, the county officials said I had a clear title.” And I'm like, “Well, you do, they're not wrong. It's just there's this extra piece.”
I think for people that are wanting to get into the tax lien world, I would never want to discourage anybody because I think it's an amazing opportunity for folks and for the communities to get put back on the tax roll or to have the house cleaned up or the yard mode. It can be great for many, many people involved in that space.
But again, you just have to have that knowledge and the education of what you're getting into when you're investing. So, you plan for that little couple thousand dollars in fees if you will.
Seth: That whole issue of somebody selling with a quitclaim deed. I know there are instances where just that alone, just using a quit claim deed that can create a cloud on the chain of title and it almost sort of seems similar to the tax deed auction, how that creates a cloud on title where it technically shouldn't but because there's no guarantee or verification of anything, it does.
I'm just wondering, say if a quit claim deed, just the mere existence of that in the chain of title, if that were to ever cause an issue, couldn't you resolve that too since it's kind of similar, or is that a different thing?
Brenda: Yeah, but a lot of times, I've had transactions that are quit claim, quit claim, quit claim, and then you get to the insurability standpoint, a lot of times we might go a deeper search back. Maybe we'll go to the 40-year or maybe a 50-year search back to see when was a policy issued, when was that policy possibly dated to pull it forward.
But sometimes, again with a quit claim you're just transferring that and everything that's attached to it. And you might get lucky and nothing be attached and then you might not get lucky and something's going to be attached. Again, on those types of things, it's just a matter of what survived.
Seth: Yeah. With your title insurance and title underwriting background, is it a bad thing for me to use a quit claim deed when I sell a property? Am I screwing something up or is it not really a problem at all? It just makes the title company have to work harder to verify stuff?
Brenda: Well, my focus is the title policy because then it becomes the title company's claim to defend. And if I have a clear and marketable title and there's nothing on there, then I want the title policy. I'm not really as concerned what type of deed I'm being conveyed.
Seth: Gotcha. What is a clear and marketable title? What is the clear definition of that?
Brenda: The definition of a clear and marketable title is a parcel that has nothing attached to it. It would be, for instance, I'm the owner of a record and that's it. I'm the owner of record. There isn't a mortgage on it, there's not a second on it. There's not a judgment, not a lien, not a state tax warrant, not a federal tax warrant, not a municipality. If they pulled my title, they would see my taxes are paid in current, my water bill is paid, my sewer bills paid. I have a clear and marketable title.
Seth: But a tax deed sale makes it not clear and marketable?
Brenda: Correct, because of the tax deed in the chain.
Seth: Okay. So, nothing is attached to it, like you said, it's just the fact that this exists at all. Even though it's clear, it's not clear. I don’t know, it's a weird conflict in my mind.
Brenda: And I can appreciate that. Again, when I go back to this, let's say you buy a property at a tax sale and it had a first mortgage and a second mortgage on it and that was it. And so now you've bought it, you've pulled the property taxes current. You mean there isn't any municipality, anything outstanding. So, you have a clear title but as far as the marketability, because in the real estate world, the manner in which the property was obtained does not make it marketable.
Seth: Gotcha. Yeah, I get it. It's just one of those weird…
Brenda: I didn't make the rule. I'm not making the rules.
Seth: I'm not blaming you. It's just unfortunate the world has to work this way. So, what is your success rate? If I bring a deal to you, what are the chances that you're going to be able to clear this thing for me? How often can you get to the bottom of it versus “Sorry, I got to do a quiet title action?”
Brenda: Sure. We run a 96% success rate, and that's either verifying it straight out, maybe possibly the supplemental noticing. And then again with the new addition of skip tracing. We work really hard to remedy it and to try to get everybody there to avoid having to do the quiet title action because of the length of the possibility of it being challenged.
But there are those cases that it's just too much of a risk for us to take and that's the path that we suggest.
Seth: Yeah. Is there anything you can look at before I pay you $350 to be like, “Nope, that's not even worth doing this. We already know it's a problem.” Any kind of preliminary boxes to check?
Brenda: No. I've had some conversations with individuals and they've shared things with me and I've been like “I don't feel good about it” or “We'd be happy to take a look at it.” Because there are a lot of things that go involved in our search and in that deep dive, not just the property search. Then we look at the tax sale process and the noticing, but then we go back through the bankruptcy records and we're probably going to go through other court dockets as well just to make sure that everything followed the statute exactly. And there's really no way to do that without that deep dive.
But there are cases where people have mentioned, like if they called me and said, “Well, the prior owners bother me or contest it.” I'm like, “Oh yeah, I don't want to touch that.”
Brenda: And then there's also ways if people can contact the prior owner and get a quick claim deed signed, then we don't have to do the verification. We can just move to insurability. But that's hard to do because a lot of times they're not found, or maybe they're not alive.
Seth: Gotcha. So really what you're doing, you're not necessarily getting things signed, it's just verifying we fully understand the situation here. We've looked at everything, we know that it was done right. We're not just taking the county at their word that they notified everybody. You are basically just having another set of eyes to very carefully look at it. But you're not getting documents executed necessarily, or are you?
Brenda: No. The only time, like I said on a supplemental noticing, we just send out a letter certified mail to a party involved and let them know that party or a property that they have an interest in has been sold at tax sale. If they want to assert their interest, they have 30 days to respond to the letter and if they don't then we just go ahead and move on to verifying the property.
Yeah. We're just researching and reviewing what's already been done to confirm that it was met to the letter of the law or the statute.
Seth: Sure. Okay. Now if a person wants to use this service but they're in a state that you don't service one of the nine states, what would they do? Do you have any other recommendations for them?
Brenda: Well, it might be something that we'd take a look at it and see. Like I said, as with the creation of US Tax Deeds Solutions, we are very interested in growing this and growing it quickly. I would just welcome a conversation to find out where they are, what is it, what can we look at? And then if they are a little patient with me, I could do some research and then reach out to an underwriter. Because we do intend to grow it and a lot of times where we are, we're there for a reason. A quiet title action is needed in that state, it's popular in the tax sale market. We like the way the statute's written. So, there's a lot of things that can marry into that. In fact, that's one reason why I'm in Alabama. It’s “Hey, can you get here?”
Again, if there's a state that we're not in, I would love to be able to have that conversation with folks because my thought is too, if I'm talking to one person, he might have a buddy who might have a buddy who might have a buddy. And then therefore it might be advantageous to go ahead and move into a state a little faster than what I thought.
Seth: Gotcha. Maybe just more of a fundamental question. Title insurance in general, what is it? For those who don't really fully understand, why get title insurance? What is it actually protecting you from?
Brenda: Okay, title insurance protects the owner from the date they acquire the property backward. When you go to the closing on October 1st, you know when you sit down there, everything that you do going forward is something that you've done to the property, but everything back from you has been remedied or released or clean.
For example, if you're buying it, you're paying cash, you're going to walk away, and there's not going to be anything attached to that property. Or if there's a mortgage, that mortgage is in first lien position, that's our insurance to that lender letting them know we're closing the property and we're going to confirm that you're in first lien position.
And it gives us the ability to then protect the property rights and that they know that going forward if somebody would come out of the woodwork and say, “Hey look, I had a mechanics lien on this property, or I had a judgment on this property,” then that becomes our claim to defend. Then the homeowner can just say, “Hey, call Bren at Title & Abstract, talk to her, she'll take care of it.” And then the homeowner knows that they have that peace of mind that they don't have to worry about losing their home.
The difference with title insurance is it's a very small percentage of the actual price of the real estate when you consider the closing, the real estate commission, surveys, appraisals, lending fees. When you get all that stuff involved, the title premium itself is a very small percentage of that entire transaction and it's something you only pay one time.
With your homeowner's insurance, it's an annual premium that you pay for insurance, but title insurance is a one-time premium that's good for as long as you own the property. Title insurance is given to the owner of record and as long as you own the property, that policy is in effect, then if you, Seth, would then sell the property to me, then I would then in return get a new owner's policy to insure myself.
And with that in a lender situation, we also then ensure the lender to let them know that they have a property that is free and clear and they're in first lien position. So, there's a lender policy as well.
Seth: Yeah. So, if somebody's doing like a flip, maybe a double closing where they buy and sell a property with two different closings within like an hour of each other, do you really have to get a title insurance policy for both transactions since the one for transaction A to B is worthless after that's done, after you don't own it anymore? Why not just pay for the one from B to C? Could you do that or is that not possible for some reason?
Brenda: Well, the title has to be cleared. If A and B aren't going to clear the title, then is B and C going to clear the title? And if B doesn't really own the property or he's not going to own it for very long, the remedy would be on him.
Seth: But you have the documents from the A to B transaction right there. They may not be recorded yet, but the person doing the closing, they get it, they see it all in front of him. Right, or no?
Brenda: But a lot of the time, we have to go by the terms of the contracts that are given to us. And so, that's one of the things that the documents that are being used state that in most examples the seller's going to convey a clear and marketable title to be. And therefore, you have to have a title policy in order to convey a clear title. And in some states, you can't do a closing without title insurance because of the way the statute or the governing laws are for those agencies. A lot of times we can't.
However, on our wholesale transactions because of what you've described as a wholesale situation, there are times depending on the value of the property, that we might be able to issue a reissue credit on that second policy. They get a little bit of a break, but sometimes if the values are low there is no reissue credit because policies may be a minimum of $100 though.
Seth: Years ago, I had written an article for BiggerPockets sort of explaining what you just said. What is title insurance? Why are we paying this all the time? What does it do for us? What's the importance of a clear chain of title? All this stuff. And there were a bunch of people in the comments who were saying things like “Title insurance is a scam. If they ever have a claim you have to file, they're not actually going to pay on it.” And first of all, people filing claims on that, I would have to think are extremely rare.
But it made me wonder since I've never had to do this, say if there was a title issue that came up and I had title insurance on it, what do I do? Do I go to the title agency or do I have to find somebody, the underwriting company, and call them? How would I actually make myself whole and get them to pay out in this situation?
Brenda: What I would recommend is that hopefully when they walked away from the closing table, they're given a closing packet. I hope they keep all that information and I would suggest that they start by contacting the title agency or agent that closes the transaction. I would start with them in order to file the claim.
In the event that that company is no longer in business, then I would then look at that same paperwork to find out who the underwriter was and then contact the underwriter. In the event the underwriter is no longer available, then I would reach out to a title company, and see what they can do to help. I've had that happen where people have reached out to me and if a certain underwriter may have been absorbed by somebody else or a title agency may have been bought by somebody, sometimes there are ways to connect those folks. And then you just file a claim.
But once the claim is filed, the homeowner is usually not involved anymore because then it becomes the plaintiff that's wanting to make the claim and that title agent and or underwriter that handles it. The ones I've been involved in, the homeowner was not involved at all. They contacted me, I got the information. I reached out to the plaintiff and then we turned it into the compliance, the legal department and then it was just handled.
Seth: How many times have you seen this where a title issue comes up on a property that's covered and some amount of money is paid out to resolve that issue?
Brenda: Well, it does happen. Because things are misindexed, I probably see this at least once a week. The beauty of my industry is we still need humans to do it and with that, there are going to be errors. And whether it's done at the county level where something's misindexed, whether the searcher misses it when they go to find something, or whether it's done at the examination level. Anywhere along the way.
For example, I'm trying to find my exact number because I just researched it for another call that I was on. I want to say approximately $362 million was paid out in title claims in 2021. It's not really a scam. You might feel like it's a scam but if you never have to use it. But when you have people that buy and sell real estate actively and then there's that one property that “Oh, my gosh I'm so glad I had title insurance,” it gets them.
Okay, here's an example. I had a guy that bought a $30,000 property at a tax sale but $260,000 in it and then called me. And I'm like “We're poking a bear.” You've put money into something. Again, I see their thought process behind it but I also see the benefits of having it. I don't know if you've ever had to call an attorney before, but if you've had to call an attorney, a good one's going to be at least $300 an hour. And when you figure about a title policy, let's say it's $600 for a title policy. That's two hours on an attorney's phone call. And I don't know if you've ever been involved in any kind of litigation or legal matters, but I've never had anything settled in two hours.
Seth: Oh, yeah. I wouldn't think so.
Brenda: Again, I think just reminding people, let's be penny wise and not pound foolish and realize what it is that you're buying, what is next? And it's not a monopoly. These are real houses. These are real structures. And for some people this is the most expensive thing they'll ever buy.
Seth: Yeah. Yeah, I totally get that. To your point, that's one of my pet peeves is when people throw around the word “scam” on something that they don't really understand and just because they've never had to use it. It's kind of irresponsible in my opinion to do that. Just because you don't get, it doesn't mean you have to trash an entire industry just because you don't see. It's one of those click-baiting words that people are like, “Oh, oh, what's this?” And just by throwing the accusation out there, tarnishes people's names. I don’t know, it bugs me to see that.
Brenda: Think about how many people get car insurance because it's a law. You have to have car insurance to drive a car. There are some people that are never been in an accident, they never make a claim, but they've paid that car insurance for 50 years. But that's an annual premium to where this is a one-time premium at the purchase, and it's for the purchase price.
Seth: Yeah, for sure.
Brenda: It's protecting your investment and that's the thing too. When you and I talk to folks that are buying their property as an owner-occupant, it's a different mindset than when it's a business. As a business sometimes you're not really maybe so much protecting your investment because you're not going to hold onto it very long. But the next person is going to want to hold on to it and they're probably going to want to make sure they're covered.
Seth: Yeah. Speaking of scams that are real, I had talked to somebody in episode 134 of the podcast who basically almost had their property stolen from them through a fraudulent transaction in Florida. And I guess this has been a bigger thing, hopefully this is not a long-term trend but as of late it's been a more common thing where people are basically faking that they own a property that they don't actually own and signing fake deeds.
When I first heard about this, I started thinking through how a real estate transaction happens, the signing and recording and the deed and the notarizing and all this stuff. I was realizing there's actually a ton of vulnerability here in ways to exploit this system and do fraudulent transactions like this. Everything from the notary stamp to the name. It kind of blew my mind when I realized it would not be that hard to really screw up a lot of chains of title with fake transactions like this if I were really foolish or a scammer.
As I was thinking more about it, it's like shouldn't there be a better way to do this in this day and age? It feels like we're still relying on an analog, outdated, antiquated system to sign and record deeds. What about blockchain or using technology where it's like “You cannot question the validity of this document, everybody here can verify it?”
Do you have any thoughts on that? Do you think the industry should evolve and what would it ever take for everybody in the real estate world to get on board with that kind of thing?
Brenda: There are definitely some things in real estate that are archaic, if you will, that technology hasn't caught up with yet. Or there are technologies that are available that are getting passed through legislation or getting presented to legislators to see if they can embrace more of the technology aspect. Because there are some concerns with that.
I just think about it as if somebody created a deed, then how did they get the legal description and how is that legal description accurate? Because if it gets recorded then you have a break in the chain because the legal description is incorrect. And when you go to pull the last record, the last deed in order to create the deed. And then with the recording, the notaries. I know some areas have to have a witness to the notary and give it another extra layer.
Seth: Well, that's the thing. All those rules are for honest people to keep you honest. Right now, I can order a fake notary stamp for John Doe and stamp it and the recorder's never going to think twice. They'll record the thing. And I've just messed everything up.
Brenda: It is very concerning and I don't know what the answer is and it is something that I think probably more and more conversations need to be had and there probably needs to be more oversight at the recorder's office. And they probably don't have the funds to do that.
Seth: Yeah. It sounds like this is not going to get fixed anytime soon, which is no surprise at all.
Brenda: I don't think you and I are going to fix it.
Seth: Has that kind of thing created a lot of headaches for your people in Florida or elsewhere dealing with this kind of fraud? Is that a huge pain for you or not really?
Brenda: Personally, I haven't come across much of it even in my world. No, I'm not saying it doesn't happen. I just don't think that that's something that's been prevalent in the files that I've been a part of.
Seth: Well, that's good. I'm glad.
Brenda: But I guess it's a matter of “if” not “when.”
Brenda: Years ago, when wire fraud became a factor, we talked about identity theft. And identity theft was all the talk of everything. And I've never known anybody to have their identity stolen. And in one month I knew three people that were victims of wire fraud. That to me was very rampant, that we have to have.
And it's almost when you talk about the issue with the fraudulent deeds being created and recorded. Then I think back to some of the things that we're experiencing with wire fraud that it's like “We've got to go backwards. Can we go back to faxing? Can I go back to mailing you a check?” It's like we're almost going backwards in time to prevent because of the advances in technology that the hackers and the email that they've been able to create this wire fraud madness.
Seth: Yeah, I know. It's just too bad we have to live in a world where we can't just trust people.
Brenda: If they are so smart to do what they're doing, can't they do it for good?
Seth: I know, I know.
Brenda: Flip that switch and just do it for good.
Seth: I know, I hear you. It takes a lot of work to learn this stuff. The average person does not understand chains of title and all these rules and stuff. So, clearly they've put effort into figuring this out. So yeah, that's just human nature for you.
Brenda: Yeah. If they could just do it for the good and not the bad, that would be really nice.
Seth: Yeah. There was one other thing when we first talked that I didn't really understand until you explained it to me and it was about IRS in state tax liens. I always hear horror stories about those. They stick to the property even after the property is sold or something like that. Do they stick to the property after it's sold and how do you get rid of them? How long do they last before they just get extinguished by themselves?
Brenda: Right, right. Whether you're going through a sheriff's sale through the foreclosure process or a tax deed sale, then once those two processes happen, an IRS tax warrant will stay on for 120 days from the data that recorded the deed. And then after that it can be insured and closed or verified and insured at that point in time. But there is a 120-day redemption period that stays on those properties.
Seth: So, if you buy a property and there is an IRS tax lien on it, basically, just wait 120 days, and it goes away?
Brenda: Yeah. Same thing with banks. During the crisis in 2008 to 2012, banks were having properties that they would get at sheriff's sale and there'd be a federal or a state tax warrant on there and we'd have to hold onto it for 120 days and say, “Okay, you can go November the 8th, it’s the date as soon as we can close it.”
And so, the same thing like with the tax gate, if it comes back and I can say “All right, as of November the 8th, you're verified and we can close but not a day before.” And at least they have that definitive timeline and they can market the property accordingly.
Seth: Yeah. That actually doesn't sound like that big of a deal. And a lot of vacant lots would take that long to sell anyway.
Brenda: Well, maybe then, but remember, just in the last couple years things were on the market for hours, not days.
Seth: Yeah, that's true. But it depends on the deal, I’m sure.
Brenda: 20 days is a long time if you could sell it in four hours.
Seth: Yeah, that's very true. It depends on the deal I suppose.
Brenda: Yeah. But yeah, they do exist, and they are there.
Seth: Gotcha. So, if somebody wants to find out more about you or utilize your services, what's your website?
Brenda: Sure. They can go to ustaxdeedssolutions.com. They can also find us on LinkedIn, US Tax Deeds Solutions is on LinkedIn, as well as Title & Abstract Agency. And then myself, Brenda Flatter, I'm on LinkedIn as well.
Seth: I will be sure to include links to all that stuff in the show notes for this episode. This is retipster.com/143 because this is episode 143.
And Bren, thanks a lot for coming off. It was great to talk to you and learn more about this. I hope the listeners out there were able to get something out of it.
Brenda: Oh, thanks for having me. I enjoyed it. Thank you.
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