"Buying Land From the Arkansas Commissioner of State Lands: What Does the Limited Warranty Deed Give You, and When Can You Finance It?"

You hold a recorded deed with your name on it, for a parcel you bought at the Commissioner of State Lands auction. You paid in full, the county has already recorded it, and the property is yours to plan around. So you call a lender about borrowing against it to fix up the home on the lot, and the lender asks one question before anything else: what kind of deed is it?

A deed from the Arkansas Commissioner of State Lands gives you only the interest the state acquired through tax forfeiture, and the state's own rule says full marketable title often takes a court action. So the plan is to clear the title first and finance second. Once a title company will insure the title, an ordinary mortgage or refinance becomes possible.

I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, NMLS #483943, through C2 Financial Corporation, licensed in fifteen states, including Arkansas. The title work in this article is an attorney's job. My part is the financing, and the financing depends on getting the order right.

What does a Commissioner of State Lands limited warranty deed give you?

Arkansas land with taxes unpaid long enough is certified to the Commissioner of State Lands, and the Commissioner sells it. The Commissioner's own FAQ says anyone may redeem a parcel after certification, up until 4 p.m. on the last business day before the sale date, by bringing the taxes current. Once the sale happens, the FAQ says, it is final.

You then receive a limited warranty deed. The Commissioner's rules in 26 CAR Part 400 say that deed gives you the interest the state acquired through the tax forfeiture. The rule says the deed often requires the purchaser to bring a legal action to get full marketable title. The state does not warrant that the title is free of defects, and researching the title is up to you, including a title search before bidding.

Marketable title is a title clear enough that a careful purchaser or lender would accept it. Your deed makes you the owner of what the state held, and it leaves open any claim from someone else who had an interest in that land until a court settles it.

Under 26 CAR § 400-203, the Commissioner issues the deed only after the full purchase price is paid. The deed is then recorded in the county where the parcel is located.

Title insurance on an Arkansas state land parcel

The Commissioner's information for purchasers says the office does not insure or warrant that the title it conveys is clear or marketable. Whether a title company will write a policy on one of these parcels is that company's decision.

A title company decides based on what the county record shows. Right after the sale, the record shows a deed giving you the state's interest and nothing that settles anyone else's claim. Once a court has confirmed your title, a title company is far more likely to insure it, and that policy is what lets a lender finance the property. Arkansas title rates are not filed with the state at all, as the Arkansas mortgage page explains, so it is worth asking more than one title company once you reach that point. Who pays for owner's title insurance covers the owner's policy itself.

A lender needs clear title before it will finance

A mortgage is a lien on the property, and the lender's protection is that the lien comes first and holds up. Freddie Mac's Guide, Section 4201.2, revised 02/04/2026, says the mortgage must be a valid first lien. The property "must be free and clear of all prior liens and encumbrances," with exceptions for taxes not yet due and the acceptable exceptions to the title insurance policy or attorney's opinion of title. Fannie Mae's Selling Guide, B2-1.5-03, puts it on the lender: "The lender is responsible for ensuring clear title and first lien enforceability."

So when a lender asks what kind of deed you hold, it is asking whether it can meet those requirements on closing day. With a deed giving you the state's interest and no title policy available yet, the answer is usually not yet. Your credit and income can be in great shape and the answer is the same, because the lender is waiting on the title. Once the title is cleared, the lender can move forward.

The ninety-day litigation period in 26 CAR Part 400

Part 400 refers to a ninety-day litigation period, citing Ark. Code § 26-37-203. It is a window in which someone who claims an interest in the land can go to court to challenge the sale. 26 CAR § 400-110 says that for deeds issued after Act 1231 of 2013 took effect, an action contesting the conveyance must be filed within ninety calendar days after the date of conveyance. The rule also says the period follows the version of the statute in effect at the time of the sale.

Ninety days is the period the rule references, and the Commissioner's rules tell purchasers to consult private counsel about the period for a specific parcel. So before you plan around a date, have your own attorney confirm the period that applies to your parcel.

If you take action or spend money on the parcel before the period expires, the rule says you do so at your own risk, and that money may not be recoverable if a challenge succeeds. If a sale is set aside, you are refunded the money paid to the Commissioner, without interest. A new roof or a well is something to schedule after your attorney tells you the period has run.

Reaching marketable title with a quiet title action

The Commissioner's information for purchasers says it directly: "In most cases, the purchaser will be required to file a legal proceeding to quiet the title or confirm the title before the title is marketable." The same page says to consider the cost of that proceeding before you buy.

A quiet title action is a court proceeding that asks a court to confirm who owns the land. Your attorney handles it from start to finish. It ends with a decree, which is the court's written ruling on who owns the land. Once that decree is entered and recorded, a title company is far more likely to insure your title, and a lender can finance against it.

The Commissioner's pages also say a legal description that does not fully describe the property can result in a limited warranty deed being declared void. That is a good reason to have your attorney check the deed's legal description against the county's records at the very start.

Arkansas does not require an attorney to conduct every closing, and title agents handle ordinary closings there. A quiet title action is a lawsuit, though, so you'll want an Arkansas real estate attorney to handle it.

Financing the property once the title is clear

Once your title is confirmed and a title company will insure it, the parcel can be financed like other property.

For a home on the parcel, Fannie Mae's Selling Guide, B2-1.3-03, revised 12/10/2025, sets the ordinary cash-out rule. At least one person on the loan must have been on title for at least six months before the new loan closes and pays out. A quiet title action that runs longer than that clears the six-month rule along the way.

If your title is cleared sooner, the same section has a delayed financing exception for a property bought without a mortgage within the past six months. Its requirements, in the guide's terms:

• The original purchase was an arm's-length transaction, meaning a sale between unrelated parties.
• A settlement statement documents that no mortgage financing was used. The guide accepts a recorded trustee's deed or similar alternative confirming the amount paid when no settlement statement was provided.
• The preliminary title search or report confirms there are no existing liens on the property.
• The sources of the purchase money are documented, such as bank statements.
• The new loan is no more than your documented initial investment plus financed closing costs, prepaid fees and points, within the cash-out loan-to-value limits (the loan amount as a share of the appraised value).

Whether a particular Commissioner sale and its paperwork fit that list is a question the lender answers from the documents. Please keep your auction receipt, the bank statement showing the money leaving your account, and the recorded deed together from day one. Purchase, refinance and cash-out explains how those three loan shapes are priced. The Arkansas cash-out refinance page covers the rest of an Arkansas cash-out, and Arkansas dower and curtesy signatures explains why a spouse who is not on the loan may sign.

If the parcel is a lot you want to build on, the financing is a different conversation, and I'm glad to have it with you by phone once the title is clear.

The order of operations, step by step

1. Before you bid. It is worth getting a title search, an attorney's read of the legal description, and an estimate of what a quiet title action will cost on that parcel.
2. After the sale. Please keep the auction receipt, proof of where the money came from, and the recorded deed together.
3. During the litigation period. Your attorney can confirm the period for your parcel, and hold off on spending money on the property until it has run.
4. Clearing the title. Your attorney files the quiet title or confirmation action and records the decree.
5. Title insurance. You can ask more than one Arkansas title company whether it will insure the title now, and compare the full quotes.
6. The loan. With an insurable title, I can look at whether the delayed financing exception or an ordinary cash-out refinance fits your timing.

Common mistakes on a state land purchase

Reading the deed as a finished title. It gives you what the state had. Planning for a court action from the start keeps the timeline predictable.

Starting improvements during the litigation period. Money spent before the period runs is spent at your own risk, and a refund on a set-aside sale comes back without interest.

Losing the purchase paperwork. The delayed financing exception depends on documenting the price paid, where the money came from, and that no lien is on the property.

Treating the ninety days as a fixed date for every parcel. Ninety days is what the rule references, and your attorney confirms the period that applies to your parcel.

An illustration

Numbers below are made up to show the mechanism.

Say you buy a parcel with a small home on it at a Commissioner auction for $20,000, paid from savings. You leave the property alone while your attorney confirms the litigation period, then files a quiet title action, and the court enters a decree four months after the sale.

A title company agrees to insure. You are still inside six months, so the lender looks at the delayed financing exception. With your documents in order and a clean preliminary title report, the new loan could be up to $20,000 plus financed closing costs, prepaid fees and points. The cash-out loan-to-value limit on the appraised value still applies.

Now say the quiet title action takes nine months instead. By then you have been on title more than six months, so an ordinary cash-out refinance applies once the title company agrees to insure.

Your next step in Arkansas

If you hold a Commissioner of State Lands deed, or you are thinking about bidding, please give me a call to talk through the financing before you spend money on the property. Calls are welcome, and you do not need to have applied for anything first. Financing a home bought at a foreclosure auction walks through the same delayed financing exception for a different kind of cash sale.

Nothing here is a loan approval, a denial, a commitment to lend, or legal advice. The litigation period, the quiet title action and the legal description on your deed are questions for your own Arkansas attorney.

Common questions

What does a limited warranty deed from the Arkansas Commissioner of State Lands give you?

It gives you the interest the State of Arkansas acquired through tax forfeiture. The Commissioner's rules in 26 CAR Part 400 say the deed often requires the purchaser to bring a legal action to get full marketable title. The state does not warrant that the title is free of defects.

Can I get a mortgage on land I bought from the Arkansas Commissioner of State Lands?

Usually after the title is cleared. Freddie Mac's Guide Section 4201.2 requires a valid first lien on a property free and clear of prior liens, and Fannie Mae's Selling Guide B2-1.5-03 makes the lender responsible for clear title. Once a quiet title action is complete and a title company will insure the title, the property can be financed like other property.

Can I get title insurance on an Arkansas tax sale property?

It depends on the title company and the record. The Commissioner of State Lands says it does not insure or warrant that the title it conveys is clear or marketable, so each title company decides for itself whether to write a policy.

How long is the litigation period after an Arkansas Commissioner of State Lands sale?

The Commissioner's rules reference a ninety-day litigation period under Ark. Code § 26-37-203, and 26 CAR § 400-110 says the period follows the statute in effect at the time of sale. Your own attorney should confirm the period for your parcel. Money spent on the parcel before it expires is spent at your own risk.

Do I need a quiet title action after buying Arkansas tax delinquent land?

In most cases, yes. The Commissioner of State Lands says that in most cases the purchaser will be required to file a legal proceeding to quiet or confirm the title before it is marketable. It also says to consider that cost before buying.

Can I do a cash-out refinance right after buying land at an Arkansas state land sale?

Possibly, once the title is insurable. Fannie Mae's Selling Guide B2-1.3-03 normally requires six months on title before a cash-out refinance. Its delayed financing exception covers a property bought without a mortgage, with documentation of the price paid and the money's source and a title report showing no liens. The loan is capped at your documented investment plus financed closing costs, prepaid fees and points.