21.04 Vendor’s Liens


In General

In some, a grantor of real estate who is not paid in full the purchase price and does not take any lien or security beyond the personal obligation of the purchaser is recognized as having an implied equitable lien upon the land conveyed. However, it should be noted that the lien of an unpaid vendor of land who has parted with the legal title is not a specific absolute charge upon the property, but only an equitable right in case the purchase money is not fully paid.

Also, any vendor’s lien is not good against subsequent creditors or purchasers unless they have actual notice of it, or reference to the lien is contained in the recorded deed from the seller to the buyer.


Procedure for the Handling of Vendor’s Lien

If any of these circumstances are present:

·  The instrument does recite the existence of the lien, or

·  The proposed insured does inform the Company about his or her knowledge of the existence of the lien, or

·  The Company acquires knowledge about the existence of the lien through any other source or method,

and although the law in some states is that the mere recital of the non-payment of a part of the purchase price is not sufficient to create a vendor’s lien, specific requirements should be made in order to file for record proof of the payment of the unpaid balance. In the alternative, appropriate exception must be shown in the title policy.