Junior Medical Lien Clouding My Title After Foreclosure

[Bradley N.]

I purchased a piece of property from a bank that got title through a foreclosure via the first mortgage lien. There was a medical lien put on the property (vacant land now) 2 years prior to the bank foreclosure. My understanding is that the only liens that survive a foreclosure are tax liens. This is a medical bill lien put on by a state agency. I've been assured by my title insurer that the tax lien doesn't follow the property owner. But a new title insurance company which I'm selling the property through is scared it might still be valid. Why is there such uncertainty that the lien has been extinguished, via the foreclosure, since there was a superior first mortgage on the property?

[Jeff Kehl]

@Bradley N. I was talking about this with an attorney yesterday. I have several properties with clouded titles because I got them at tax sales. He told me exactly what @Ned Carey said, the title is probably fine the real issue is that they don't want to insure it because they have experienced a large expense litigating titles that are a bit clouded like that. It's an economic decision for them not whether they believe the title is clear or not.

He gave me what I think is some great advice and a strategy we are going to follow. Find the lien holder/stakeholder and offer them a small payoff for a quitclaim deed. If they give you a quitclaim deed and you record it all of the title companies should accept that.

Very important how you or your attorney present it to them. Legally they are entitled to nothing and they will get nothing as long as you hold the property and don't sell which could be 100 years. But if they want to make a few hundred dollars now to sign a quit claim deed it would certainly help you out.

As I said we just discussed trying this so I will let you know how it goes but thought I would share so you could try it as well.