Pailhtorpe: To be quite specific, the lender on this deal will, upon sheriff's sale, probably bid and get the property back. If there is a qualified buyer who can out bid the lender, (meaning that they want it so badly that they bid more than the lender thought it worth) it will go to that bidder instead. At the end of the sale, a Sheriff's deed is the method of conveyance. This does not wipe out tax liens. If the sale is to satisfy that of the primary, superior claim (almost always the case) then the subordinate claims (liens) are invalidated. There can be old liens and other issues that cloud the title. Usually, the lender, being the successful bidder, cleans up all these issues and sometimes, they offer their title search work to the party that buys the property from them. If they do, it can save the new buyer the cost of a title search. It will not save the buyer the cost of Title Insurance, which is needed if there is a new loan needed to complete the sale. (I guess you can skip it if youâ€™re paying cash.) However, Title Insurance is just about universal and protects the new owner from prior claims to the property from anyone else.
So, a title search, usually conducted by the lender who bought back the property ,will discover all these claims. The lender, now the seller, will clear up these claim before they pass title. You should get an up to date title search (even if you add that to the closing costs of your purchase by ordering one yourself) which will answer your question specifically and at the time of closing and then you will buy title insurance to protect your property from any old liens.