How Long Before Title Insurance

How Long Before a Tax Sale Property Can Get Title Insurance?

A common question investors ask is: “How long after a Hawaii tax sale can you get title insurance?”

There is no specific law that automatically makes a tax-sale property insurable after a set number of years. However, in practice many title companies follow internal underwriting guidelines when deciding whether they are willing to insure a property that was acquired through a tax lien or tax deed sale.

One guideline that is often discussed in Hawaii real estate circles is a 10-year ownership period.

After roughly ten years of ownership without any legal challenges from previous owners, some title companies may begin to consider issuing title insurance on the property. The reasoning is that the likelihood of someone successfully challenging the tax sale decreases over time.

That said, this is not a guarantee, and policies vary between title companies. Some insurers may require a longer history of ownership, sometimes closer to 20 years, before they will issue a standard title insurance policy without additional legal documentation.

Because waiting that long can make it difficult to sell or finance the property, many investors instead pursue a legal process known as a quiet title action.

A quiet title lawsuit asks the court to confirm that the current owner has clear ownership of the property and that any previous claims are extinguished. Once a quiet title judgment is issued, title companies are often much more willing to insure the property, making it easier to sell or refinance.

For this reason, investors purchasing property through Hawaii tax lien sales or tax deed auctions should always factor in the potential need for legal work to establish clear and insurable title.