SDR, that is a good model for thinking about it and good model for addressing the issues involved. The only caveat I would add is that generally title companies have records a few days out of date. Sometimes the getting a title policy does not cover claims arising from events between their last update and the issuance of the policy. For example there is a trustee auction on Aug 30. On Aug 29, your preliminary report and policy are issued. The title company files were last updated on Aug 25th. There was a mechanic’s lien filed on Aug 27th.
I don’t know if there is a title policy that would protect you from this. There might be. In fact, I don’t know what the procedure is for issuing policies for trustee sales. Do you happen to know?
So I have too many unknowns here to make an actual case for the danger involved. However, it has occurred to me before that an unethical contractor could just go around doing minor work on abandoned properties and filing liens that the bank would have to pay off down the road.
