A prior deed of trust from a dissolved LLC is sitting on title and the seller cannot produce a release
A deal worth studying: purchase price 410k, the buyer's lender is ready, closing is scheduled in nine days, and Schedule B-II on the commitment lists an unreleased deed of trust from 2011 securing a 180k note. The original lender was an LLC that the state dissolved in 2014 for failing to file its annual report. No successor, no registered agent on file, no one to sign a release.
The seller says the loan was paid off and that the LLC just went dark afterward. That may be true. It tells us nothing about whether a release was ever recorded, and it was not.
Three paths exist. First, the title company orders a payoff statement or some confirmation from whoever wound down the LLC. If the members are traceable and cooperative, they can execute an affidavit of satisfaction or get a court order confirming payoff, and an underwriter may insure over it. Second, the title company insures over the lien under a gap or specific risk endorsement, which some underwriters will do when the lien is old enough and the dissolved entity is demonstrably dormant with no successor debt activity. Third, the buyer's attorney petitions to quiet title, which is thorough and kills the nine-day timeline entirely.
The assumption doing the most work in path two is that the underwriter treats a dissolved LLC with no successor as low enough risk to absorb. Some will and some will not, and that answer comes from the underwriter's internal guidelines, which the title agent needs to pull before the buyer's lender gets reassured prematurely. If the lender gets a commitment with the lien listed as an exception rather than insured over, that loan does not close.
What is the title company saying about whether their underwriter will take the specific risk endorsement, and have they already submitted it for approval?
