Posted by Tim Jensen on April 03, 1999 at 07:11:29:
In my state, Illinois, when filing a foreclosure the senior lien holder must give all junior lienholders notice that they are foreclosing. This gives the junior lienholder an oportunity to proptect their interest in the property.
The way the senior lienholders finds out about the junior lienholders is that they order a title serach. This is where a title compnay researches the title to see who has an interest in the property. At this time, the title company does not issue another title policy (at least not to my knowledge).
Lets say that the title search missed a lien and that junior lienholder was not given notice of the foreclosure. If the property is sold at sherrif’s sale, then that junior lienholder still has an interest in the property. In other words their lien is still good and the senior lienholder would have to either restart the foreclosure proceddings again or pay off the junior lienholder that was not notified of the foreclosure.
Now this brings me to another interesting point. In Illinois, if another lien is placed on the property between the time the foreclosure proceeding was filed and the sale date. That lien is not valid. That is what my attorney told me.
Now if you run into a situation where there was a lien filed after the foreclosure case was filed. I would get all the information about that lien and hand it over to the foreclosuing attorney. Let them decide what they want to do with it.
I hope this clarifies things.