Maybe I should not have asked the question, because what i suspected could happen has happened.
Seller did a deed in lieu of foreclosure. Signed a deed back in July. Bank did not record the deed, but instead just let it sit.
In the meantime, the former owner had judgments on him which attached to the house.
We went under contract and have been sitting here waiting to close, and the bank has to negotiate the judgments. they cannot foreclose them out, as they have agreed not to foreclose on the property.
A previous post had said the title transfers upon the signing of the deed, not the recording of it. I agree, and at the same time these are bona fide valid judgments against the owner of record of the property. You cannot simply record a deed months later and have those judgments go away.
Still does not answer my question on why a bank would not want to get the house back in their name as soon as possible. This is not an isolated case.