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.

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.  

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)? 

It is called delayed financing and requires that you pay cash for the property and "cash out" prior to 6 months.

Basically, this is a blank check provision - not a good idea on a ten year loan with yield provisions as a pre-payment penalty.I have not checked the insurance requirements against our current insurance policies, but I'm afraid there will be more surprises. 

If they wont remedy you will be able to get out of the deal prior to closing.

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