By: Mike Schwab
Navigating Property Lien Searches with a Municipal Lien Certificate
Surprises are great if it’s a birthday party or a new puppy, but when preparing to sell or buy a new home, you want the closing to be as uneventful as a well-done burger with no toppings. Imagine your surprise when your closing agent calls you three days before closing to tell you that the last-minute public records search uncovered a $3,000 lien on your property. Turns out the owner before you didn’t pay his water bill, but now it’s your home — and nowyour problem!
Thankfully, you can still have that uneventful home-purchasing experience as long as you perform a property lien search before you close on your new home.
What is a Property Lien Search?
A property lien search (also known as a municipal lien search) is a search for any unrecorded liens and unresolved balances on a property. This type of lien is unrecorded, which means it is not made public record and will not show up on a routine title search.
In many municipalities, an unpaid utility bill accrues interest and late fees over time. If this utility account remains affiliated with the property — instead of following the name on the account — the utility company may place a lien on the property, accruing more fees and preventing the next transition of ownership until the balance is paid.
If you are considering selling your home, it’s a good idea to make sure the property is clean of all liens and unpaid balances before you put it on the market. You may think this is unnecessary since you faithfully pay your bills every month and the building permit from last year was closed on time. The previous owner before you, however, may have left some hidden surprises. While you purchased your home with no trouble, enough time may have passed that when you are ready to sell, the previous owner’s unpaid water bill has become a lien, and you can’t sell until you pay the bill.
If you are thinking about buying a home, it’s a good idea to ask that a property lien search is done well before closing. If the previous owner hasn’t paid his water bill, you can catch him before it’s your problem and ask that the bill is paid before closing. Now you can move in knowing you have a clean home. As long as you continue to pay your bills, selling will not be a problem for you either.
Can I do theproperty lien searchmyself?
Yes! If you know who the utility providers are, call and ask if unpaid utility bills stay with the name on the account (in which case the previous owner remains responsible) or if they stay with the property. If they stay with the property, you will need to ask for a property lien search and pay the utility company for the report. You will want to do this for every utility on the property, as well as building permits and code enforcement with the appropriate municipalities. If you are buying in another city or state, you will need to make sure you have the right utility companies for your new home and the right municipal jurisdiction for codes and permits. Depending on the area, you may need to call up to five different companies to find the right provider for each utility.
While it is possible to perform the research yourself, it is time-consuming. Another option is to have the property lien search done professionally and negotiate the price with your other closing costs. Look for a company that guarantees their product, so you are not liable if the report were to miss something.
Association Online’s Municipal Lien Certificate
Association Online offers a Municipal Lien Certificate (MLC) that reports on every lienable utility. You will receive a complete report with the provider and contact information for each utility on your property. If there is an open balance or lien, we’ll also provide supporting documentation and instructions to resolve the issue before closing. AO’s report includes water, sewer, trash, stormwater, gas, and electric, as well as information for any open code violations or open or expired building permits. Tax Information, Special Assessments, Zoning Violations, Construction Violations, and Fire codes (commercial only) are available upon request.
Association Online does MLCs nationwide. The average turnaround time is between 5 and 7 business days, but if you need it back sooner, we can prioritize your order to meet your deadline. Additional costs may accrue from the municipality, but Association Online will never charge rush fees. We’ll provide you with rush options for submitting our research requests with the municipalities and will alert you immediately if any delays arise. If we run into any unusually high open balances or violation issues that may take longer to resolve, we will alert you right away.
Navigating a home purchase can be complex, and finding a property lien so close to the finish line can make it that much more frustrating. Thankfully, with Association Online and our Municipal Lien Certificate in your corner, we can help make the process much smoother and avoid those little surprises. Contact our team to get started today!
