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sorry I have asked this question before, but I think after rearranging my sentences, this makes it much clearer...
If there is a lien that is not of record when the transfer of Title takes place but goes of record after the fact I own the property, in these two scenarios:
a) if the seller knew about it but did not disclose it and it is their debt
b) the seller did not know about it but it is their debt
in these cases, do I have to go after the seller directly in either of these scenarios instead of having the title insurance cover the lien or debt? thanks.
The best advise is to tell you to contact a Title company, that specializes in handling these matters, and it would be my thoughts, that if they missed it, they would take care of. But call a couple, and get their advise. Good luck.
Title insurance companies often SPECIFICALLY exclude liens that COULD NOT have been discovered through normal means because of delays in filing or attempts to hide some liens.
You'd think that, but then you don't run the title insurance companies. These guys are unbelievable in regard to what they exclude against. It's all legal, spell out in black and white. They have ridiculously low pay outs, it is not an auto insurance company or life/ casualty insurance. They basically write the exclusions so that they almost NEVER are liable. I suspect they can do this because they are really performing an "service" to the lender -- mostly researching the prior transactions to make sure no obvious fraud is being perpetrated. The borrower is unlikely to do deal with them EVER... When you buy a run down houses to fix up you learn pretty quickly that people than don't maintain their house have a tendency to let other bills pile up too. Then you figure out how to hold the seller liable for liens that even the title insurance company can't know about. I suppose they could operate that way, but it would involve a lot more litigation, and court time is very expensive...
In Oregon seller's have to fill out a form that asks about debts and liens on the property. If the seller knew about the unrecorded lien and didn't disclose it then, out here, they would have potentially committed fraud.
Unless there is a construction lien, you cannot place a lien on a house owned by someone else. If there was a court judgment for a lien and the title company missed it, then the title insurance would cover that.
I know you asked about this before, but it really depends on 1) who place the lien and for what and 2) was the lien placed after the house was purchased or was it before and the title company missed it.
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