There may be a potential problem here but it is most likely the title insurance company’s problem. If they issued a title policy knowing that a lienholder had not been notified then they must be comfortable with the circumstances. Do you know if notice to the absent defendant was published in the local paper? How diligent were the efforts to locate him? This is ironic because right now I am suing a title company for the exact same issue. I hold a tax lien on a property which was sold “free and clear of
all liens” by order of some half asleep judge. I did not get one iota of notice until afterwards despite having a recorded certificate at the county level. (this has due process violations all over it). I will let you know how this goes since it seems to parallel
your situation.
In 1997, I purchased a property at a tax sale. After taking title, I paid for an abstract. The abstractor informed me of a lien she found and gave me a Mortgage Affidavit to fill out. The Mortgage Affidavit said:
"That the said mortgage does not affect your deponent(s) in any manner whatsoever in that your deponent(s) have no knowledge, prior to or since the acquisition of title, of any action taken against the said mortgage. That in fact your deponents were never served with any papers or had any correspondence at any time in any manner whatsoever regarding the above mortgage nor have your deponents been subject to any action.
This affidavit is made to induce Old Republic Nat’l Title Insurance Company to issue a title insurance policy for the premises."
I signed it with a notary public.
Since the abstractor was able to write a title policy, upon receipt of the Affidavit, the problem soon vanished from my memory.
The county that sold the property to me was unable to locate the company (they sold and installed windows and doors) and therefore unable to ‘notify’ them of the pending sale.
I sold that property shortly thereafter.
My question is:
Did the abstractor solve the problem with the Affidavit? Or am I still on the line here? Or are the current owners of the property picking up a liability?
Wish I knew about creonline when this situation came to light.
Title companies are not in the business to take chance nor to pay claims. The inducement you made to them may well be argued that they did not insure against a real claim. The company that sold doors and windows may have gone bankrupt. The assets(note) may have been sold in a pool to someone and they have not followed up yet. I have purchased a second that way to foreclose and wipe out a third. The title insurance may well except that lien from a claim. It would be worthwhile to do a little investigation to see what did occur.