How An Indemnification Clause Can Protect Buyers Against Unpaid Liens 

06/09/2026 10:33 AM       Mark Goodman

As a title services company, our main goal is to ensure a property’s title is free from potential issues that could cause problems for the sale and for you as the owner once you officially close on the property. One of the most common title clouds that we run into is the presence of a lien on a title. 

A lien is a legal claim that is placed on a property for an unpaid debt. For example, if you failed to pay your property taxes, you had work performed on the property and a contractor is claiming you never paid them, or you fell behind on your mortgage, a lien may be placed on your property. If you sell the property, that lien will need to be resolved prior to the sale because liens stick with the property, not the property owner. In other words, if you purchase a property with a lien attached to it, you may become liable for that outstanding debt even if you weren’t the reason the debt was accrued in the first place (title insurance can also protect you in these instances). 

If you want to close on a property but you notice there is a lien attached to it, an indemnity clause may need to be written into the deal. In today’s blog, we explain how an indemnity clause can protect you from property liens during a commercial property purchase. 

Indemnity Clause Protections

If every individual acted in good faith, we wouldn’t need indemnity clauses, but you never want to assume that someone else will act as expected. If you trust the wrong person without an indemnity clause in place, you can be stuck with their lien. Other interested parties like your lender or your title insurance company may require an indemnity clause be put in place just to confirm they aren’t taking on additional risk, so know that it’s possible one will be required even if you do trust the seller to act accordingly. 

An indemnity clause basically acts as another layer of protection for a buyer while a lien is being resolved. Let’s say that closing draws near, but a mechanic's lien from a contractor is discovered shortly before closing. The seller believes they paid that contractor but needs time to research their finances and determine the validity of the lien. An indemnity clause will be put into the closing contract that essentially states that this potential debt remains with the seller even after closing. Without it, the seller could say that they’ll look into it and promise to pay it, only to ghost the buyer and leave the debt with the property once the sale goes through. The indemnity clause will help keep a sale on track but protect the buyer from any known liens that are being investigated or in the process of being resolved. 

Don’t end up on the hook for someone else’s debts. Connect with a title services team, let them identify any and all liens, and ensure they come up with a contract that ensures you aren’t caught holding the bag once closing arrives. 

For more information about protecting your finances and your best interests throughout the process of a commercial purchase, pick up the phone and call the team at Commercial Partners today at (612) 337-2470.