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Land Bank discusses title problems, considers bonding and title-company solutions
Summary
Board members debated the limits of quitclaim deeds, quiet-title timelines, and whether the land bank can use bonds or guarantees to persuade title companies to insure formerly-tax-foreclosed properties.
Fort Scott Land Bank members spent substantial time on Sept. 16 discussing how to obtain insurable, marketable title for properties acquired at tax or sheriff's sales and whether the land bank should pursue bonding or other mechanisms to satisfy title companies.
Board members and staff described a pattern: many parcels arrive with clouded title or liens and have been conveyed to the land bank by sheriff's sale, often as quitclaim deeds. The board discussed that quitclaim conveyances can limit the ability of buyers to obtain mortgages and that title companies have differing policies about accepting such title. The land bank’s local title company, Security First (as cited orally by staff), was noted as cooperative on searches but may have limitations on issuing insurance without additional clearing actions.
One board member proposed buying a bond or guarantee — suggested analogously to a VA loan guarantee figure of $25,000 — to provide assurance to a title company so the company would write policies on parcels with unclear histories. Staff cautioned that title-company policies are company-specific and that quiet-title or other legal remedies can be lengthy; members referenced waiting periods of two years with personal service or 15 years without personal service for some title remedies. The board directed members and staff to research title-company willingness to insure, to explore bonding or other underwriting options, and to identify key parcels where investment in title clearing would be most productive.
No formal vote was taken; the board assigned follow-up research and outreach to title companies and indicated staff would report findings at a future meeting.
