I've got a question for those here who have a good handle on real estate law and a second part question on insurance ramifications.

I'm a landlord with a number of properties that I have historically bought by paying off negotiated judgments and liens to clear up the title. Most often I am essentially doing a short sale on the property negotiating with the primary lien holder and telling all of the juniors that the owner is getting ready to be in foreclosure and they can either take pennies on the dollar from me or get nothing on the foreclosure date due to the fact that the property is already worth less than the 1st mortgage.

From time to time I run into ones that have boatloads of liens on the property but it is completely paid off so no mortgage. I have no negotiating ground here because of this. So the lienholders want all of their money and they would be more than happy to see the guy go to bankruptcy so the house is forced to be sold and they get their share.

I have been considering buying these houses and not paying the liens and just leaving them clouded on the title. My interest is not to sell the house as I am a landlord. And the judgments will fall off when they are 20 years old (IRS 10yrs) unless they renew for another 20 which is highly unlikely.

The particular scenario I am talking about is a house I will buy for $1,000 and will rehab it for $6,000 and will have unpaid taxes that will have to be paid which will be about $800, closing costs of about $800 and will have it rented in a few months for $500/mo

My questions are:

I understand the junior lien holders can foreclose on the house for payment of their lien which would cost them I guess around $2,500 to do. Most of his liens are well under $2,500 but he has one that is the oldest in the early 90's to a hospital for $3,000 and one in 02 for $6,000. Most of his liens are criminal judgments, many are Virginia vs Him and it doesn't tell specifically what they are for, one eviction and a couple child support that are in the 3K range. Is there any reason you guys see that one of these juniors would want to foreclose once I bought it or am I pretty safe as I have heard in buying it and not paying the liens? What are some factors you see that would motivate a junior lien holder to foreclose considering the cost of doing so?

Also, I don't think the insurance company is going to insure it without title insurance on it, which I won't be able to get due to the fact that it will remain loaded with liens. Am I wrong about this? And if not, in what ways should I protect myself from lawsuits, etc. Should I put it in it's own llc and get a personal umbrella or something like that? If it burned to the ground I would be out about 8K, if it happened prior to the first couple of years of getting rent. I'm not too worried about that.

Sorry that it is a pretty loaded question but I would like to ensure that I am taking a good risk prior to doing so. Watcha think about this deal?