The nature of closing dates is that they are not steadfast. It's commonplace when they get moved up or extended, depending on the demands or discoveries by the parties involved. If you're an attentive closer, you'll have your municipal lien search ready before the originally anticipated closing date--but what happens when that date gets pushed out? One of the most important things you can do to protect your neck and your client's (if you're representing a buyer) is to get that municipal lien search information updated, especially the code enforcement information.
Why you should be getting code enforcement updates
This is crucial because since you first obtained the information, the following things may have happened:
- New violations could have been cited.
- Existing fee amounts will likely have increased.
- A violation may have turned into a lien.
- You may have had the time to negotiate smaller payoffs and cleared those issues up.
- Violations or permits may have been corrected.
I know that it's a pain to deal with turnaround times again when you're so close to your closing, but the glaring truth is that having the most up-to-date information can save you from a potential claim. This is why I want to share a real-life example with you to demonstrate what I mean.
The deal with Orange County Code Enforcement
There are municipalities, such as Orange County, that do not have full control over their data. They work very hard to record the most recent and accurate information, but between their workload and lack of resources in various departments, it's just not possible. The way Orange County operates is that it has online databases for their code enforcement department, one that contains violations and one for lot cleaning liens.
Even though this information is easily accessible to the public, it is not updated as much as you would think and we've seen it cause real headaches for our industry.
When the updated information isn't up-to-date
Over the last couple of months we have found that Orange County only updates their violation information once a week, and lot cleaning liens every two weeks. They'll release it on Monday and it will only have information that covers up to the end of the previous week (or prior two weeks for lot cleaning liens).
Within that 1-to-2-week gap any new code enforcement violations that are cited are not made available to the public. This means that even though you have a lien search that says there are no violations, the most recent information the county made available can be missing something.
What's more frustrating is that the county will not guarantee their most recent results. Basically, you could never discover that violation or lot cleaning issue and the county will still hold the new owner liable for it.
Do what you can to close the gap
We don't want to freak you out, but this is a growing issue. As demand is increased on these departments, these "gaps" are more common, and Orange County is not the only one. The one thing you can do to close the gap is to order an update as close to your closing date as possible, so you have the most up-to-date info available. However, it still isn't going to guarantee that you'll discover all the new issues, but it is still the best way to arm yourself against surprises.