Undiscoverable liens and encumbrances

Had an interesting experience at a closing
There was a document that made the buyer responsible
if undiscoverable liens were discovered after closing.
Has anyone else seen a document like this? Buyer kicked
up a stink about it for real.

@jennjoneis Hmmm . . . that seems quite strange.

Did the Buyer utilize a reputable Title/Escrow Company [T/EC] for their real estate purchase transaction?

It’s my understanding that it’s normally within the scope of Title Search that the T/ECs perform for the Lender during the underwriting process segment of preliminary research to ferret out any “surprises” regarding the title to the property.

If there are any “clouds” on the title; i.e., liens, encumbrances, etc., they’re “discovered” at that point in time.

Maybe the T/EC was endeavoring for the Buyer to purchase Homeowner Title Insurance from the T/EC.

FYI: The Title Insurance that is paid for during the Purchase process and that’s listed on the Settlement Statement and/or Closing Disclosure is Title Insurance that protects The Lender.

Most buyers are quite SHOCKED when they discover this status; i.e., being presented with an Undiscoverable Liens document at the time of the Closing. Unfortunately, most people think that Title Insurance protects them, the Buyers.


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Smart buyer. Strange document. Wonder how Seller pulled inclusion of that document off.
Was this a cash sale? Doubt a lender would allow this.


The last time I purchased property (around 20 years ago) I recall that it was possible to add on buyer’s title insurance to the lender policy if the buyer acted promptly after the closing, and the fee wasn’t very much. I had already decided on buyer’s coverage, so the language didn’t apply to me.

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This was not a cash sale. The lender spoke to that title company’s closer and after a long conversation
it was determined that the buyer would not have to sign that document. The buyer was relieved and proud of himself for catching it.

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Yes, this was a reputable title company (at least that’s what I was told) It wasn’t one of the big well known companies, though. When I heard the term “undiscoverable liens” I though it sounded like something off of the mystery CSI shows. lol

interesting, good to know.

@jennjoneis FYI: This is “Buyer’s Title Insurance” that I referenced within my post above & within the excerpt here . . .

It’s a “Sales Incentive” for the T/EC. This is something that T/ECs usually want the Buyers to purchase in addition to everything they’ve already purchased, because it adds more to their bottom line.

Normally, it’s a document within the Purchase Package as an Option to Purchase a separate Homeowner’s Title Insurance Policy (as the original title policy protect the Lender, not the Buyer as I previously stated in my separate post above). The terms utilized on the document you reference would be “alarming” to the signer(s). Thus, it’s normally just identified as “Homeowner’s Title Insurance Policy/Buyer’s Title Insurance Policy.” In my direct experience, it often generates a phone call during the signing appointment to the T/EC.



Yep…in CT, buy the Owner’s policy and the mortgage policy was free. (OP more expensive because premium is based on purchase price, not loan amount)

It was highly recommended in CT, especially after the Golden Hill Paugussett Indians started to stake claims on various parcels of real estate through the state claiming they were Indian Lands and trying to take peoples’ homes

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Woa It is like something off of CSI :eyes::eyes::eyes::eyes:

It’s a very common document. It indemnifies the title company/lender against harm should the signer take on any other liens before this one is of record. Let’s say a second mortgage with a different lender and title company, or a private loan that the buyer did not disclose on their application. Title and the lender would have no way of knowing about it until that second lien was recorded. There’s really no reason to be alarmed unless you plan on committing mortgage fraud.


oh wow Thanks for clarifying. I’ve never seen this document before. I wonder if it is state specific.

Thought I would read forum since I couldn’t sleep ~ interesting topics. Jenn love your enthusiasm and desire to learn. Liens have been around since Civil War period and perhaps earlier. Worked for large company & instructed lien process for all US states and all states have different lien laws. Fast forward to current lien environment and fraud is rampant. Home owners should periodically check assessors website for their address and see if liens placed against property without their knowledge. Fraudulent liens happening more frequently all over US and criminals often prey on older folks. No self education classes out there that cover all states. Property owners need to watch their backs. 10 years ago I was flipping houses and monthly checked assessors office for my properties. I did catch subtier to subcontractor that placed lien on one of my properties. Electrical subcontractor did not pay supplier subtier. My process was pay subcontractor with check and have sub sign full lien waiver. For my small projects didn’t think needed to also receive lien waiver from subtier similar to large companies ~ live and learn.


Wow!! This is great information. Thanks alice2uworld.

Homeowners take note.

Checking for bad behavior related to land records is wise. The procedures vary from place to place. In Vermont towns the town clerk keeps track of the land records, including leins. The tax collector and listers (that is, assessors) are separate people and maintain separate records.

Some municipalities automatically mail a notice to the holder of record whenever a land record is recorded. Some places do this, but only if you sign up for it.


As a 39 year real estate agent, I always recomnend an extended policy. Not a recommendation we can make as notaries. I would refer them to the title agent for clarification.

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Its valid. They also need to pay for a Extended title policy and maybe a closing protection letter.

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