Generally there is a right of redemption when purchasing Washington State real property at a Treasurer’s Tax Sale. There are historically three ways of eliminating or shortening the redemption period to allow more prompt marketable sale of the property:
- Get a deed from the former owner and releases from any lien holder whose interest was eliminated by the sale;
- Conduct a quiet title action; or
- Get a certification from Tax Title Services that would allow a title company to insure title free of the tax sale issue. There is a cost for using their services, but it would be less than a quiet title action.
There are ways to 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.
A quiet title decree is only a 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 Quiet Title Decree based upon only service by publication does not extinguish the risk of subsequent challenge based upon lack of process.
Other than a deed from all persons who held ownership at the time of the prior tax sale, or a Quiet Title 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 clients and attorneys 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 is not a redemption period and not 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 Quiet Title 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 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 (with actual possession) and RCW 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.