UNDERWRITING Q&A: At what point will title be insurable following a tax sale in Arizona?

A:  These will always be evaluated on a case-by-case basis.  Prior to obtaining a Treasurer’s Deed, the purchaser at a tax sale must bring an action to foreclose the owner’s right of redemption pursuant to A.R.S. 42-18202.  There are several steps in this process which must be examined.  If a Litigation Guarantee related to the redemption foreclosure lawsuit is available, the agent must review it to verify that identified parties were named as defendants in the action.  Otherwise the agent should review the back chain of title and perform a GI search to identify who should have been named as defendants.  There should be a Lis Pendens recorded in connection with the lawsuit.  The next step is to review the court file to verify proper service upon the named defendants.  It is always preferable to verify that individual defendants were served personally.  Proper service upon entity defendants including beneficiaries of Deeds of Trust must also be verified.  The Court’s Order foreclosing the right of redemption must be final and non-appealable.  The appeal period is generally 30 days following entry of the Court’s Order but can run up to one year for parties served by publication. 

As always you are encouraged to contact your regional underwriting counsel to discuss insuring title following a tax sale.