At a time when the economy is in sore shape and the real estate market has seen better days, it is only natural that investors would look for new ways to profit from the real estate. One such way is buying up tax deed properties at substantially reduced rates, with the prospect of turning around and selling the home at market value. This can be an extraordinarily profitable endeavor, particularly for those people who are in the know when it comes to tax sales. Unfortunately, the road to riches is paved with more than just gold. In order to move forward, you’ll need to go through a quiet title action, which can be costly and delay maximizing your investment.

One of the primary disadvantages of exploring tax deed investment is the myriad of time-wasting obstacles that stand in your way. In addition to waiting out any redemption period required by law, or market conditions, many investors face dealing with a slow and arduous court action in order to be able to resell the property for maximum profit.

As part of being able to take over a tax deed property and purchase title insurance, you’ll have to go through a quiet title action. This involves initiating a court action that mandates all other claims to the title be silenced and gives you exclusive rights as the property owner. Unfortunately, this process can take anywhere from six months to a year or even longer. In the meantime, your money will be tied up in an investment that you can do absolutely nothing with. This frustration and lag time leads many to abandon their hopes of finding a profitable niche in the real estate industry, moving on to a different type of investment. This is unfortunate because there is certainly money to be made. » Read more: Quiet Title: The Downside to Tax Deed Investment

In South Africa, each property has a title deed and all property transfers are registered in the Deeds Office. The title deed contains all the information with regards to a particular property, such as the erf number, property address, owner’s details, mortgage (if any) as well as servitudes and restrictions. A copy of the title deed of each property in the country is kept in the Deeds Office. The original title deed document is in the possession of the owner or financial institution holding a mortgage over the property.

Most potential property buyers (especially foreigners and first-time buyers) are not aware of the existence of the title deed and the process of transferring a property or the role of the Deeds Office in the process. Those that are aware of title deeds, often have heard of it but perceive it as some phantom document, lost in the archives of a governmental department. Very few potential buyers know that these documents are extremely important and that they have a right to see the title deed of any property they are interested in buying.Can you imagine the frustration of a new property owner who wants to extend the house he has just bought, but finds out that he can not add even one more room to the house, due to restrictions on his title deed? Another example is of a couple who recently bought a very large property with the idea of creating a breathtaking garden. They were told that an underground river exists, running across their property. When they bought the property, it was with the express idea to sink a borehole in order to have sufficient water for their planned garden. After transfer has taken place and they have moved in, they found that there is indeed water in an underground river and that the cost in sinking a borehole would be minimal, as the water is fairly close to ground level. As far as they were concerned, their dream was coming true – until they found out that they can not sink a borehole on their property, due to restrictions on the title deed!Property buyers should always ask their agent for a copy of the title deed of the property they are interested in buying. Read it carefully and ensure that there are no servitudes or restrictions which might impede on your ideas with regards to the property. If you plan to extend the existing building, look at the building restrictions. Should your plans include running a business from the property, determine the zoning of the property and ensure that your specific business can indeed be run from that property. Buying a property without seeing the title deed first, could be a serious mistake on any buyer’s part.