120 days is Federal Language as to insuring after a Sheriff's Deed.  I am guessing the HOA obtained title through a Sheriff's Deed and not a Final Judgment only.

There may have been other liens such as mortgages.  Those may still be open, just like in a tax sale where the lien holder will foreclose the taxes, but not name any other parties other than the homeowner.

That being said, there may be certain time restrictions based on the 120 days for the United States to redeem interests, if the HOA paid the re taxes too, then there are certain requirements for insuring on tax sale foreclosures, etc.

I don't understand why the title agency would just disclose the time restrictions on their exceptions from coverage until the time limit passes (ie 120 days Federal, 1 year on tax foreclosure, etc.)

Remember too, the owner has a right to redemption and that may be holding up the issuance of a final policy.

However, as an examiner in NJ, we are pretty straight forward as to our requirements and exceptions for all commitments and final policies issued.  I'd talk to a senior person at the current title agency or shop it out to an agency that has no problem identifying the insurability issues for you.

Unless there were mistakes found in the actual foreclosure proceedings that need to go back to court to be cured (yep, we find them all the time) typically its a matter of waiting for rights of redemption that hold up the resale of a foreclosed property.

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