One of my partners has done private money lending for decades and has written credit policy for lenders.  

If she 'sells' the house, the lien will still be on the property and will have to be settled before a new title policy can be issued.  

Then your late fee policy will include all charges.

Its not ideal but thats what he is comfortable with and it pretty much puts him at almost zero risk. 

Or if you take title on a quit-claim, you're getting whatever interest that seller had, along with any clouds on that title.Most common way is to have a traditional closing that clears title and pays off any liens, issues a title policy, and gives you true marketable title - that is only encumbered by whatever you have encumbered it with (mortgage, trust deed, UCC 1, Promissory note, etc.)If you don't / can't go through traditional title (say for example, you buy at a tax foreclosure sale), I'd say it's best practice to go through the quiet title process.  

Recent podcast by the FlipNerd regarding Title Research and Title Policies.  

Guys, let's be honest. 90% of people don't end up doing it because they can't put together the capital and/or credit and no one will loan them the money to fund a deal.If it was easy, everyone would do it, profit would approach zero, and we'd all have to go find some other way to make money.Remember this when you're advocating hard for easier loan qualifications and no money down deals, etc... don't bite the entry barrier that feeds you.

Be careful though as this will void your title insurance policy.  

What do I need to look for when getting a homeowners insurance policy on my first fix-n-flip property in DFW (Texas)? 

Besides purchasing my primary residence with my wife I have zero Real Estate experience.