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What is a Property Lien Search?

December 14, 2022

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A real estate transaction can't be completed without due diligence. It requires property inspections and meticulous reviewing of all relevant records to ensure everything is in order. This should come as no surprise, given a property's market value and the amount of money exchanged in these transactions.

Property lien searches represent an essential step to safeguard your investment.

What Is a Property Lien?

As defined by Nolo, a lien is a notice that's attached to your property, telling the world that a creditor claims you owe them money. In other words, a lien allows creditors to put an unpaid debt on the public record and a legal claim to a portion of the property once it's sold.

Reviewing Property Liens for Real Estate TransactionPeople find many hurdles if they want to sell a property that's under a lien, so liens work as an effective tactic to help the indebted party get the money they're owed. In most cases, a property can't be sold or refinanced until the lien is cleared, which is reflected on the property's title.

When it comes to real estate properties, these are the types of liens that could hinder a closing:

  • Mechanic/Contractor's Liens: They refer to instances when owners hire contractors and fail to pay for the contractor's service once the work is done. They usually result from major renovations and home improvement projects.

  • Judgement Liens: They happen when someone wins a lawsuit against the owner in court. The ruling is left on record, showing that the owner is indebted to the other party. Judgment liens can be attached to child support payments, unpaid credit card debt, medical bills, etc.

  • Tax Liens: They can be filed by the IRS and result from unpaid taxes. They're superior to all other types of liens and can make owners lose their interest (their rights on the investment) in the property.

  • Homeowner's Association Liens: The HOA can place a lien on a home in their community when homeowners fall behind on their payments.

The ripple effect of a lien shifts the course of a real estate transaction, and that's why property liens searches are considered an essential step in the process.

Property Lien Searches Are Important

A property lien search is essential to ensure a smooth process because it allows all relevant parties to identify any issues early on. This way, a title company can find solutions to problems that could cause delays or save clients a lot of money on an unfair deal.

In short, a lien search refers to the investigation and subsequent report made on a property. Its main goal is to disclose liens, record inaccuracies, bankruptcy proceedings, and potentially fraudulent practices.

These are the main goals of property title searches:

  • They verify a property's legal ownership. The main goal is to confirm that the seller is the property's owner at the time of the transaction. Still, a title search also reveals the number of times the property has changed owners and identifies any person who could hold rights over the property besides the selling party.

  • It will disclose any of the liens described above, which is important because a property can be under more than one lien. The search will also reveal the number of mortgages placed on a property. Mortgages are usually placed by a lender when a person requests a loan to purchase a property. An undischarged mortgage will hold off the transaction until the mortgage is paid.

  • Legal data attached to the property, like its legal description and property identifier number (PIN). Errors can be overlooked when any of these records are issued, and a single character can make all the difference in your rights over a specific property. The search could also reveal enroachment and discrepancies in the property's financial value.

A property lien search comes in handy in several scenarios. For instance, it could hasten the payment of pending taxes before local government agencies attempt foreclosure on the home. It also ensures a less stressful process, putting any issues on display long before closing.

Conducting Lien SearchProperty liens are usually conducted by a title and escrow company or a law firm specializing in real estate procedures to ensure a thorough process. Usually, they're performed on behalf of the buyer, but conventions can change across different transactions. Buyers are always free to do the legwork and look through public records on their own. Still, real estate agents recommend getting the assistance of a real estate company that operates in the property's location. After all, unrecorded liens are rare, but they still represent a risk in many states.

The safest practices also involve getting a title insurance to protect your money and property if there's any gap left from the lien search. A title and escrow company can issue the correct type of insurance according to the client's role in the transaction.

These and many other services will be available when you work with Key Title & Escrow. We specialize in property lien searches, title insurance, escrow, homeowner's insurance, and more. We provide a wide variety of title & escrow services to help you ensure a successful closing early on. Our specialists oversee each process step, and we count on the necessary technology to review any given amount of data without causing any delays.

Suppose you're about to embark on a real estate transaction, Key Title & Escrow can help you cover all your bases. Don't hesitate to ask our specialists about property lien searches or any other requirements in a real estate transaction. Call (305) 235-4571 or toll-free at (800) 547-0006. You can also fill out the contact form on this page, and our specialists will get back to you in a time-effective manner. You can trust Key Title & Escrow for all your real estate needs.

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