Whatever title company it is will be on the hook if a defect comes up down the road.

Most of the homeowners are even now using epoxy systems to cover defects in their old flooring slabs.

Other than not touching the property, is there any way to limit this liability when they find a causal link between trace meth exposure and, say, birth defects or cancer?

They thought they made a good buy BUT the property has defective drywall AKA Chinese drywall.

When I see a potential flip property that has been on the market for a long time I can't help but wonder what catastrophic defect it has that has prevented someone else from purchasing it.  

You haven't really provided enough information for us to make an educated guess, but the mention of a deed of trust would lead me to the possibility that HUD has reason to believe that there might be a defect in the foreclosure procedure that let to HUD obtaining ownership of the property.

Now, the seller does not respond to any call from me or my agent  My agent says he , along with the lender and title company, are working on resolving the issues - prorated rent, security the deposit , defective keys, and assured me that they will be resolved.

If you sell the property and sometime later a defect in the title is discovered that would be grounds for a claim against a title insurance policy, you essentially became self-insured.Get specific details from your favorite real estate attorney or title company.

As the values declined the rents did fall a little but are still fairly high as a percent of property value.Barriers for entry into these markets include cost to cure title defects which can include tax liens and city liens, etc and cost to cure the physical property.

If it was just on the phone it is hard to prove.I won't put anything into a statement unless they will sign a statement saying so.If they do not feel strong enough to sign then I can't put my faith in what they are saying is true or to count on it.If you don't have clear title you don't have anything.You simply have to wait it out or accept to close with a defect or cloud on the title and handle it later.Everyone usually waits it out or cancels the contract.This is also why I do not believe putting up large amounts of earnest money on short sales.They lock up the money and the chances of closing are 50/50.