Help with Title Problem!!

[Vania Castillo]

Hello BP community!

I'd like some advise with the following Title problem:  Three years ago I foreclosed in a tax lien and became the owner of the property.  I sold it with seller financing and insured the Title with no problem.  As a matter of fact I got a second note on the property and no problems with the Title were found.  Fast-forward, two years later at the time the borrower wanted to refinance and the same insurance company that had previously insured the Title claimed that the Title is "clouded", so the new owner (my borrower) can't refinance and pay me back.

I spoke to the lawyer who did the foreclosure and he assured me that the Title has not problem and the reason it was rejected by a second insurance company was because once one company rejects a Title, no one wants to touch it. He said that I would win in Court if I take my borrower to foreclosure.

In order to "cure" the Title a new foreclosure must be done.  This is my dilemma:  This property is not longer mine, but the owner wants me to pay for the new foreclosure, even thought that the he is the one bringing the petition and the judgement will be on his name.  These are the options I see on the table:

1.-  I could do nothing, wait for the note to mature, foreclose in my borrower and "cure" the Title after the property is mine

2.- I could split the cost and pay for 50% of the cost of "curing" it or 

3.- Offer to pay 100% of the cost to allow him to close, with the condition that he pays me back at closing.

Please, I love to hear your input about the right thing to do and don't want to be taken advantage.  I want to be fair to him.  Thank you in advance!