The only thing I can even think of off hand is that if an owner changed title from one entity to another and failed to properly convey title back or to another entity (as investors do from time to time) and such manuvers messed up the title chain, you might be at risk.

Deeds generally are not conveyed with restrictions for SFDs especially in the county, that's a zoning restriction.

This endorsement does not convey any coverage to the additional interest nor cost the tenant any additional premium.

If the mortgage being foreclosed is not the first / more senior mortgage, then the winning bidder has to deal with any more senior liens in order to convey clear title in the event of a sale. 

Since them I have dug deeper and found the irs is now requiring this information be conveyed to them.  

As I see it, if he's conveyed what he wants to get by presenting it via a specific cap rate, that's golden as the task at hand isn't getting him to agree on a price, but rather he needs to be enlightened at how to use the cap rate formula.  

@Joshua Smith"because all debt is exactly the same no matter what according to the detractors"You just keep demonstrating your ignorance about what we are trying to convey to you here.

@Jason TerrellThe foreclosing institution can pass the responsibility for title V compliance to the buyer and you will be responsible for compliance AFTER conveyance.  

This endorsement does not convey any coverage to the additional interest nor cost the tenant any additional premium.Additional Insured -  a party listed on an insurance policy that has some type of liability interest in the property.

All a quit claim deed does is convey the interest the person issuing the deed has in the property.