Top 5 Mistakes You're Making with Municipal Lien Searches
Knowledge regarding municipal lien searches has come a long way over the past couple years. I started my time with PropLogix more than 5 years ago in the trenches, doing lien searches and since then, I've seen a lot. Now, as the Chief Operations Officer, it's my job to make sure we're constantly improving our processes, and I can confidently say we're working hard to make sure we get the most up-to-date and accurate information available. Unfortunately, we see a lot of people--whether it's other lien search companies, people who do their own searches in-house, or even sometimes our own clients--making mistakes that could leave a client unprotected. I'm here to tell you the top mistakes I've seen so you can be sure that you're getting the most out of your Municipal Lien Search.
Not updating your Lien Search after 30-Days - Many people order their requests as soon they open a file for a property to ensure they get the information in time for the closing. In my experience, if a lien search was ordered and delivered back to you and your closing was delayed, or pushed out, you should always update your search if it is more than 30 days old. A lot can change in that time: new utility bills are released, municipal code hearings are filed, permits expire, special assessments go into effect, etc. Be sure to always have the most current information regarding the property in question.
Utilizing an in-house resource to do the work - These searches can be time consuming and troublesome for one to track down all the most current and up-to-date information from a municipality and the various departments. It's not necessarily a mistake to do lien searches in-house, but we hear horror stories of things getting missed. Companies like PropLogix have created great relationships with municipalities and are able to track down all the right information, plus if we miss something, it's on us. It just makes sense to let someone else track down all the information, handle all the follow-up and (most importantly) take on the responsibility and liability for you if something is missed.
Skipping the permit search portion of your lien search - We see this a lot and like to warn that it can be a big mistake. At the end of the day, if you're working for the buyer, you're responsible for helping them with due diligence. If they move into their house and discover open or expired permits when they go to make improvements, they're going to wonder why no one found the issue. They're going to look to the real estate agent and the agent will look to you.
Relying on info from municipal websites - If you think relying on the information from municipal websites is thorough due diligence, think again. Barring a select few cities and counties, it's very common to see out-of-date and inaccurate information. We've seen information that's months, or years old. Unless you have validated information with the municipality, you can't be sure that it's accurate. It takes a lot more effort, yes, but we're not willing to cut corners and you shouldn't be either.
Not getting a Lien Search at all! - This seems obvious, but it's still a common occurrence and the biggest mistake of all. I have heard it more than once - "We don't need a municipal lien search, we got a title search." Believe it or not, municipal liens will only show up on your title search if they are filed with the county clerk of court. For one reason or another, municipalities have not filed these liens in the county clerk, but it's still an outstanding debt that they expect to be satisfied. A municipal lien search will find these unrecorded liens. Skipping it could leave a buyer liable for any debt attached to the property in question.