The title search is an integral part of the real estate transaction. It’ll find any encumbrances or recorded liens on the property as well as show issues like judgements or easements against a property and tax delinquencies that may not yet constitute a recorded lien.
In order for a title insurance policy to be issued a title search is required, but sometimes there are unrecorded municipal liens against a property that will not be revealed in the traditional title search. This is because the municipality does not always publicly record recurring code violations or overdue utility bills.
As a result, many underwriters, lenders, and homebuyers require an additional search to ensure there is no hidden property debt or other issues lurking in the shadows ready to grow into a monster of a lien after closing. If you find this search as a requirement of your title commitment, it can be overwhelming to know where to start.
How do I perform a municipal lien search on a property or home?
For settlement agents, title processors, paralegals or even homebuyers who are unfamiliar with this type of search, here is a break down of some the steps in requesting a municipal lien search.
- Determine the property's municipality
- Confirm utilities
- Research the annexation history of the property
- Find the governing authorities with the power to levy special assessments
- Request information from appropriate department(s)
Step One: Determine the property’s municipality
The first step to check if your property has any unrecorded debt or other municipal issues is to verify the governing authorities. You will find this information easily accessible on the county property appraiser’s website.
The title commitment uses the legal description as the main identifier for the property. This makes sense as the legal description is unique unlike an address or property owner name. Unfortunately, most property appraiser websites don’t support searching by legal description.
You will want to confirm the address, property owner, and parcel control number (also known as a Property Identification Number or PIN).
Search the property appraiser for one of these and then confirm the legal description in the results match was is found in the title commitment.
In this example, you can see that the “Municipality” is listed as “Unincorporated”. This means that the county is the governing authority with the right to file any code violations on the property. The county is also the municipality that will administer permits. Typically, the utilities may also come from this authority, but not always.
Due to annexation and vast suburban sprawl, it’s possible for a property to be within one jurisdiction on the property appraiser card but serviced by another municipality close by like a town, city, or even a Community Development District or water district managed by another public entity.
Step Two: Confirm utilities
Water, sewer, and other utility services on a property may or may not be managed by the same entity with a right to lien on a property. In order to ensure all service information is requested from the correct provider the first time, call to confirm the municipality services the specific address for all utilities.
It’s not uncommon for a property to be serviced for water by one municipality and for sewer from another.
Following the previous example, it would be a fair assumption that this property would be serviced by the county since it lies within the county jurisdiction. However, that’s not the case. After searching the Palm Beach County Water Utility Lien System, it yields no information on that address or owner.
The town of Jupiter is actually the water provider, and it’s currently on septic. It’s within the jurisdiction of the Loxahatchee River District should it be assessed for future sewer hook up.
Some municipalities will not always give verbal confirmations over the phone regarding their services. In the case of the Loxahatchee River District and other providers, there may be online maps available to check if the property is in their service area, but it doesn’t clarify if it’s currently being serviced and billed. To confirm there are no assessments for sewer hookups or outstanding bills, the best practice is to always request this information in writing should the property lie within their service area.
Of course, if you’re unfamiliar with the area, figuring out where to even start can be difficult. My best advice should you have trouble is to check an online map and see what municipality are adjacent to the property. If a property is unincorporated but not serviced by the county, it most likely will be serviced by one of the nearby towns, cities, or villages or on well and septic.
County departments of health or environmental protection are typically charged with the permitting and testing of drinking wells and septic tanks and will usually have records confirming if the property is on well and septic. Some property appraisers will also note if the property is on well and septic.
Step Three: Research the annexation history of the property
Okay, here’s a crazy caveat to know about municipal lien searches… sometimes, even after confirming the current municipality on the property appraiser, a property may require documentation from the former governing municipality to ensure there are no open code violations or expired permits with fees from years past.
This is because the property was previously within the jurisdiction of the county and later was annexed by a nearby city, town, or village. Annexation is common in states with fast growing populations and development.
To check if your property may have been annexed, you can search the county’s Geographic Information System (GIS) map. If it’s in an annexed area, be sure to request code and permit history from both the county and the current municipality.
Step Four: Find the governing authorities with the power to levy special assessments
Special assessments go beyond water and sewer hookups. Stormwater, street lights, road pavings, and many other community improvement assessments may affect a property. In many areas, just like water and sewer, these assessments may be levied and managed by the county even if the property’s municipality is a city within the county and vice versa.
Assessment Districts formerly known as Special Taxing Districts are common in Miami-Dade County. These are districts where a majority of property owners have agreed to allow the county to provide public improvement and special services through a non-ad valorem assessment.
Theses are services that go beyond the scope of other common special assessments and include:
- Street Lighting Districts
- Security Guide Districts
- Multi-Purpose Maintenance Districts (landscaping and other community maintenance)
- Capital Improvements Districts (one-time upgrades and improvements to water/sewer, drainage, utilities and other roadway improvements.)
Both developers and homeowners can petition to create a special taxing district and require either an approval by the Board of County Commissioners or a majority of qualified voters agree to the conditions.
Sellers within in an Assessment District are required to disclose this to homebuyers so they are aware they must pay these special annual assessments that will not be covered in the regular taxes. The seller must record the buyer’s written acknowledgment.
Step Five: Request information from appropriate department
Phew… now that we’ve gotten the bulk of the tedious research out of the way, you can now make your requests to the appropriate municipal departments. Be sure to follow each municipality’s directions on making the request. Some will accept simple emails while other have forms that must be filled out and sent via fax.
A full municipal lien search will be sure to include the following:
- Property and Tangible Tax Overview
- Special Assessments
- Code Enforcement History
- Permitting History
- Utility Information
You may get lucky and have a property located in a municipality that requires only one document, but chances are with most properties there will be several requests to different departments that will need to be made.
Is it really free to perform a municipal lien search?
Not usually. Most municipalities charge a fee to divulge this information in writing. It may be possible to find some of this information online, but buyer beware, online municipal information can be notoriously outdated and has no guarantee for accuracy. But you may get lucky and have a property that doesn’t have any municipal fees.
Even if the property is in a county or municipality that charges no money for this information, there is still a lot of time and energy put into the search.
Fortunately, if you want to make sure that no property debt and other municipal issues are missed, working with a third-party title support partner like PropLogix helps title companies and real estate law firms gather important documents required on the title commitment and improve their internal staff's daily workflow. Our property analysts have been researching properties, building relationships with municipalities throughout the United States, and establishing the proper process for obtaining real-time data from the right governing authorities for years.
Closing agents and title processors are already bogged down with a multitude of tasks related to the title search. For a title company or law firm experiencing growth, partnering with a trusted company to perform this search will help their teams manage their time more efficiently and reduce risks associated with issuing policies that cover these municipal issues.