In the process of real estate transactions, few steps are as crucial and yet often overlooked as the municipal lien search. As prospective buyers and eager sellers anticipate closing day, the significance of conducting a thorough municipal lien search cannot be overstated. This meticulous investigation into a property’s financial history and compliance with local ordinances serves as a safeguard against potential pitfalls that could disrupt an otherwise seamless transaction. Unearthing hidden liens, unpaid taxes, or outstanding code violations, a comprehensive municipal lien search acts as a key protective step, ensuring that buyers acquire not just a piece of real estate, but a title free from encumbrances that might haunt them long after the closing documents are signed.
What are Lien Searches
Lien searches are designed to alert closing agents, buyers and sellers to potential issues stemming from old permits or permit violations, municipal fines, and outstanding utilities. Lien searches are a crucial part of any closing, since many liens revealed in these searches are unrecorded liens and attach directly to the property, rather than to the property owner. Without a lien search, buyers may find themselves on the hook after closing for unexpected fines or penalties.
What Types of Issues are Identified in Lien Searches
Common types of liens found in a lien search include real estate property taxes, back taxes owed to the IRS, mechanic’s liens, code enforcement violations, open or expired permits, unpaid special assessments, unpaid municipal utilities, county debts, and building code violations. If the issues identified in the lien search are not properly resolved, they may continue to accrue interest for years and become harder to resolve, regardless of change of property ownership.
How Do Lien Search Findings Affect a Real Estate Closing
Any type of lien, whether the result of current or previous owners, impacts how you can use and enjoy the property. Financial liens, such as taxes, unpaid utilities, and mechanics liens, can have devastating effects for homeowners, especially if they were not the individuals who caused the lien. While it is not overly common to unearth unknown liens from several closings ago, it is not unheard of. Regardless of the cost to resolve the lien, it is a surprise for sellers or buyers and has the potential to derail an otherwise smooth transaction. Code enforcement violations and open permits also pose a large challenge, as it may result in the homeowners having to remove an intended improvement, wait for reinspection, or risk having to hire a new contractor to complete or bring a project up to code.
Regardless of the type of results found on a lien search, the consequences of ignoring the findings or omitting a lien search altogether in an attempt to save a small fee can easily result in larger, more devastating financial consequences down the road. Working with an experienced real estate attorney for your closing can help reduce the amount of time it may take to resolve common issues found on lien searches and may even save your closing from falling through.
Whether you have an unexpected finding on a lien search or just want the peace of mind of having a qualified attorney to handle your closing, give our office a call today to speak with a member of our Real Estate team.