The way I understand liens, the person selling the property has to pay lien off. As for your foreclosure question, I can't help you.

Typically when the title to the property has reverted to the ownership of the first position lien holder the secondary (and any other) lender is out of luck and out of the picture as far as the new buyer is concerned. You would not be buying a home with a second lien already attached. The secondary lien holder can, and frequently does, file a claim judgment against the former owner, personally, to try and recoup their money.

No, you do not have to pay off the loan. However, if you do not, the bank with the secondary mortgage can foreclose on the home. To understand this you have to pay close attention to who owns what, and you must know the rule that "you can only sell what you have." If you have a home with two mortgages, then who owns what? Well, that means you own nothing but a contract for future possession, or a home subject to two liens (depending on the state). Which, in either case, means you have nothing you can sell. Bank 1 owns a security interest in the property. And bank 2 owns a security interest that is secondary to bank 1. If all the banks are included in the foreclosure proceeding, then bank 1 will get paid first, bank 2 will be paid second, and any leftover will go to the person being foreclosed upon. If there is not enough equity to pay off the loans, then bank 1 gets paid first, bank 2 gets the remainder, and bank 2 then needs to bring a deficiency action to make up the difference. However, if bank 1 forecloses without including bank two, then they can only sell what they own (which banks can do, but it is not in their best interest to do). In this case, what they own is a house subject to bank 2's security interest. Thus, the buyer can only buy a house with a security interest attached. As a practical matter, when this happens in real life, the person who buys the foreclosed home pays the fair market value minus the security interest amount, and then immediately pays off the loan.