1.40 Agreements Not To Transfer Or Encumber


In General

Occasionally, lenders make loans that are not secured by any real property.  We typically do not insure non real property loans. However, when personal property is part of the collateral for the loan, it is possible to issue the First Loss Endorsement, T-14.

In these situations, it is customary for lenders to secure from the borrower(s) an agreement to the effect that the borrower(s) will not convey or encumber certain specified real property until the debt referred to in the agreement has been paid in full.

Generally, this kind of agreement is known as an agreement not to convey or encumber or an agreement not to transfer or encumber.

Any agreement not to transfer or encumber must be properly released of record prior to closing, or if not, must be shown as a title exception in the policy in Schedule B.