Speed up your closing workflow and never miss unrecorded liens by outsourcing Municipal Lien Searches
A municipal lien search is a report of unrecorded liens, in addition to code violations, certain special assessments, utility, and open or expired permit issues that are associated with real estate.
The municipal lien search is an important part of due diligence for a real estate transaction in many states. That’s because certain issues that could become a problem for a new owner aren’t always recorded as a lien with the county clerk.
The three most recent years of real estate property taxes are highlighted on our report’s cover page. Additionally, a summary of all property taxes is included inside the report.
Special assessments are collected for projects like new roads or water and sewer hookups. They are usually levied through additional taxes. The special assessment section will show unpaid installments from general purpose government projects.
Pending code violations aren’t typically recorded in the public record. Here you will find if there are any open cases and the current amount due.
When an open or pending issue has fines attached, we provide payoff information to settle the unrecorded debt.
Upon request, open or expired permits are provided. When available, a full permit history can be provided as well.
Unpaid utilities can add up quickly. We provide the most up-to-date billing history available so a new homeowner isn’t caught off guard by an unexpected water bill.
Curious to see what a municipal lien search report from PropLogix looks like? We take great care to make the information clear and easy to find. See for yourself.
A title search will only show what is in the public record of the county. Typically, most municipalities will eventually record debt associated with a building code violation or unpaid utility bills, but there is a time delay between sending notifications to the current owner and filing the lien. Sometimes, a buyer may get caught in this “gap” period where debt is racking up on the property. Unless the proper requests are made to all governing bodies before closing, these issues will remain hidden from the buyer.
Other issues, like open and expired permits, aren’t typically recorded in the public record, so the only way to find any outstanding fees or potential remodeling issues associated with the property is to contact the building department directly and request this information.
Buyers should be aware that this type of search is not part of the title search.
Our Municipal Lien Search Report includes the three most current property tax years. Any prior unpaid years for taxes or tax lien certificates issued by the county against the property are also provided within the report.
Tangible taxes are common for properties used in commercial businesses or for rental properties. Depending on the type of property being purchased and its current use, tangible taxes may or may not be included.
Property tax liens are placed on a property when the owner falls behind on their taxes. This is one of the many types of encumbrances settlement agents look for during the title examination period. However, depending on the time of year, recently unpaid taxes may not show up in the public record due to the backlog of paperwork at the county recorder’s office.
Additionally, some municipalities may include special assessments or utility bills on the property tax bill, but other municipalities may disclose outstanding special assessments and utility charges through a separate department.
The tax bill also helps to further establish which municipality or municipalities have governing jurisdiction over a property. This is helpful in some jurisdictions with unclear information from the property appraiser.
The tax information found in our Municipal Lien Search Report shouldn’t be confused with our Tax Certificate Report, which details taxing authority information.
The real estate contract will usually identify which type of property information is customary for your area. To help you determine which is right for you, you can read more about when a homebuyer needs a tax certificate here or contact the title agent or real estate attorney handling your closing.
For states that issue a tax lien certificate on properties, the owner could lose the property in a tax deed sale. A third party who purchases a tax lien certificate could ultimately become the legal owner of the property in question.
Alabama, Arizona, Colorado, Florida, Illinois, Indiana, Iowa, Kentucky, Maryland, Mississippi, Missouri, Montana, Nebraska, New Jersey, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Vermont, West Virginia, Wyoming, and the District of Columbia are all considered tax lien states.
Towns or counties in these states will auction off the tax lien certificates to investors, who then pays the taxes on behalf of the property owner. The certificate allows the investor to collect unpaid taxes plus a rate of interest that can range from 8-30% depending on the jurisdiction.
Acquiring a property through a tax deed sale is rare since most homeowners eventually pay the back taxes. The term of the tax lien certificates typically ranges from one to three years, so it’s imperative that a homebuyer is aware of any tax lien certificates placed or pending on a property.
A mechanic’s lien is supposed to be recorded in the public record. Unfortunately, for some homeowners, these can be missed simply because of bad timing. Read more about the “gap period” of the title search and how an open permit search could have saved one couple from a $27,000 lien.
A municipal lien search will show the current utility balance of a property within a jurisdiction that liens for outstanding balances. In many areas, the new owner will be responsible for any unpaid bills after the closing. Read more about what types of utility accounts will attach liens to the property.
Similar to utility balances, a code lien will start off as a code violation. Many municipalities will wait to record this public record. In order to find these pending issues, a special request must be made to the appropriate department. Read more about some of the most common (and surprising) code violations.
A mechanic’s lien is supposed to be recorded in the public record. Unfortunately, for some homeowners, these can be missed simply because of bad timing. Read more about the “gap period” of the title search and how an open permit search could have saved one couple from a $27,000 lien.
A municipal lien search will show the current utility balance of a property within a jurisdiction that liens for outstanding balances. In many areas, the new owner will be responsible for any unpaid bills after the closing. Read more about what types of utility accounts will attach liens to the property.
Similar to utility balances, a code lien will start off as a code violation. Many municipalities will wait to record this public record. In order to find these pending issues, a special request must be made to the appropriate department. Read more about some of the most common (and surprising) code violations.
Special assessments are charges levied against a particular property that will gain a benefit from a public project. They typically include infrastructure improvements such as new roads, street lights, or sewer, stormwater, and water connections to the municipal supply.
While general purpose government special assessments are typically collected through property taxes, it’s important to research whether a special purpose government (such as a CDD), which is not part of a municipal lien search, also collects special assessments.
In addition to public special assessments, a property that is part of a private association (such as a homeowners’ association) may also have special assessments levied by that private association. This can go toward anything in the community that will improve the general amenities. This assessment is in addition to association fees and can be found in our Association Estoppel Report when applicable to the property.
A Municipal Lien Search report from PropLogix will include any code enforcement case information for violations where fees are still accruing or past cases where amounts are still due.
Some of the most common code violations are:
While the causes of these violations may be easily removed or remedied, the fines may still be active. Homebuyers and real estate investors can’t rely on a visual examination of the property to confirm any open code enforcement cases. Some cities, counties, or townships may also charge daily accruing fines, which means a persistent nuisance could become a multi-million dollar problem.
Our report will detail any permits on the property that are open or expired. When neglected, an open or expired permit can cause challenges if an owner tries to obtain permits in the future, potentially delaying or creating unexpected costs for new renovation projects. There is also the potential for open or expired permits to escalate into building code violations and building code liens.
Our search will verify which entities service utilities on the subject parcel, including water, stormwater, sewer and trash (where applicable). Our report will detail whether these accounts are in good standing or if they have any current or outstanding balances. In addition to the report, a utility ledger that breaks down the utility billing history for the property is provided when available.
A new homeowner is held responsible for the previous owner’s bills in certain circumstances. The unpaid bills may eventually become a lien on the property. In most cases, the amount owed is manageable, and the final bill is forwarded to the seller, who usually pays without question.
In some cases, however, a missed final utility reading can cost the new homeowner thousands of dollars after closing.
Requesting a utility ledger along with other municipal information within the billing cycle before closing helps the new owner avoid these surprise bills.
The types of unrecorded liens and municipal issues affecting a property can be unique. In some areas, additional searches and forms may be required. Some of those may include the following:
If unpaid code violations, special assessments, expired permits, building code violations or other municipal issues have resulted in unrecorded and unpaid liens, our analysts attach that information to the final Municipal Lien Search Report.
Please contact one of our business development representatives to learn more about creating the right Municipal Lien Search report for your closings.
For homebuyers and real estate agents, you’ll want to reach out to a reputable title company or real estate law firm to confirm if or when these forms are necessary to protect the interests of a new homeowner or real estate investor.
