While the title search should uncover any liens associated with the property, you also want the protection that the actual title insurance policy gives you in case something is missed.

The 200 bucks is far cheaper than the deposit you'll lose if you don't close on their flawed title.   

Here are the costs to address the issues uncovered by these experts: 1.Wood floor and wall in the middle unit: $44,000 + tax + $2,800 for permit, but engineer report is needed for a formal quote.2.Roof above the middle unit: $8,000 + tax + $800 for permit + ply wood;3.Sewer line outside the building (see estimate): $7,365 total;4.Sewer line inside the building (see estimate): $21,663 total;The total cost plus 10% contingency is equal to $100,000 in repairs that I cannot afford to pay and still be able to fulfill my obligations to you and to the tenants that will have to be displaced for the duration of repairs.In addition, the appraisal came in at $275,000 that is considerably below the $340,000 number.Proposed solution: You will complete all the electrical repairs and ensure all three units are brought up to current code including the outlets.You will have the stucco repaired on the exterior that was damaged by the electrical proof.

That will get the city out to look at the house and hopefully uncover anything.3.

She could do a quit claim to her husband, then he could execute the special warranty deed.The old contract for deed was a go-to strategy back in the day, usually done improperly and full of flaws they rarely were pulled off as agreed, now besides the determination of sale issues with the IRS, these now get into other title matters, wrongful foreclosures, lost deeds, pre-arranged unlawful deed transfers and/or predatory lending/dealing issues.

Do you see any flaw in the plan ? 

Some quality platforms still exist with inherently flawed business models.  

It could just be some lipstick on a pig and you still have a number of uncovered issues.Happy Investing!

Welcome any corrections if my thought process is flawed.  

Though the whole grading system is a flawed personal opinion, I just don't see it.