Prior to filing the lawsuit to foreclose upon a construction
lien, it is important to determine the identity of all parties
who may have an interest in or claim to the property which
is inferior to, or equal in priority to, the Claim of Lien
being foreclosed, as all such interest holders should be
joined as parties to the lawsuit. Failure to join in the
foreclosure lawsuit all parties whose interests are inferior
to, or junior to, the interest being foreclosed may result
in the need to amend the complaint, reopen the lawsuit,
or file another foreclosure lawsuit. It may also result
in the inability to foreclose the unnamed interests at a
later date.
Obtaining a title search and a foreclosure title insurance
policy from a qualified title insurance company is the most
practical means of protection against costly errors in identifying,
and foreclosing the interests of, the proper parties to
the lien foreclosure lawsuit. There are different types
of title searches that can be performed, and consideration
should be given to determining the scope of title search
best suited for the particular circumstances. While the
search performed in conjunction with the issuance of a foreclosure
title insurance policy will identify all claims against
the property which are equal to, or inferior to, the Claim
of Lien being foreclosed, it may not identify the interests
that are superior to the Claim of Lien being foreclosed.
Information as to superior claims may be useful in determining
whether there is sufficient equity in the real property
to justify the costs of a lien foreclosure lawsuit.
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