Posted on: 9 December 2021Share
After a homeowner accepts your offer to buy their home, you need to do a title and municipal lien search. Municipal lien searches are critical in the home buying process. You may find unexpected liens that could cost you thousands of dollars more. Plus, you could have other problems down the road. Continue reading to learn more about what a municipal lien search could reveal and how to protect yourself.
What Is a Title Search?
Your lender or insurance company may require a title search as a condition of getting a loan or insurance. However, title searches are not the same as municipal lien searches. Title searches usually check for liens against the homeowner or property. They also check to ensure the home has a clean title and the current owner is the true owner.
What Is a Municipal Lien Search?
A municipal lien is a debt owed to the local government. Municipal liens usually involve things like taxes, utilities, and public improvements. If the owner owes money on these items, the local government (also known as a municipal corporation) puts a lien on the property. The lien remains on the property until paid off regardless of the sale.
What Can a Municipal Lien Search Show?
While title searches can show if you have a lien on the house or property, municipal leans may reveal the following issues:
- Unpaid municipal utilities
- Unpaid utility improvement fees
- Unpaid sidewalk installation or road paving fees
- Unpaid Mello-Roos or school assessment fees
- Unpaid sewer fees
- Unpaid taxes
- Unresolved code violations
- Unresolved permits (or open permits)
What Happens if One Finds a Problem?
You will not be able to complete the purchase if your property has unresolved liens. If you discover your property has a municipal lean, you have several options. Below is a list of the five most common ways to resolve a problem with a lien.
- Ask the seller to resolve the problem before finalizing the purchase
- Ask the seller to compensate you for the additional expenses
- Ask the seller for a short sale
- Agree to assume the lien (potentially risky)
- End the buying process and find an unencumbered property
By thoroughly investigating your home's background, you will be prepared if you decide to proceed with the purchase. Municipal liens are not usually required by the lender or insurance company in most cases. Therefore, many people skip them. Doing that is not a good idea as you could find yourself with a liability you weren't expecting. If you need help with a title or municipal lien search, contact a lien search company for help.