Legal Definitions - tax title

A tax title is a legal claim or document of ownership to a property that is acquired through a government sale due to unpaid property taxes. When a property owner fails to pay their taxes, the local government has the authority to sell the property, or a lien against it, to recover the outstanding debt. If the original owner does not redeem the property by paying the back taxes, penalties, and interest within a legally specified period, the purchaser at this tax sale can then obtain a tax title, which transfers ownership of the property to them.

• Example 1: Residential Home Acquisition
  An elderly homeowner, struggling with medical bills, falls several years behind on their property taxes. The county government eventually puts the home up for a tax sale. An investor purchases the property at the auction. After the legally mandated redemption period passes without the original homeowner paying the outstanding taxes, the investor is issued a tax title, legally transferring ownership of the house from the original owner to the investor.

• Example 2: Undeveloped Land for Future Development
  A large, undeveloped parcel of land has been abandoned by its owner, who stopped paying property taxes years ago. A local developer, recognizing the land's potential, researches the property and discovers it's available through a tax sale. The developer successfully bids on the property, and once the statutory period for the original owner to reclaim it expires, the developer receives a tax title. This allows the developer to legally proceed with plans to build new housing on the land.

• Example 3: Commercial Property and Title Due Diligence
  A small business owner is interested in purchasing a vacant storefront for their new boutique. During the title search conducted by their attorney, it is revealed that the current seller acquired the property through a tax sale and holds a tax title. The attorney explains to the business owner that while a tax title grants ownership, it might carry specific legal considerations or potential vulnerabilities if the original tax sale process had any procedural defects. The attorney advises the business owner to obtain enhanced title insurance to protect against any future challenges to the title's validity.