Not all Municipal Lien Searches are created equal

What is a lien search and how does it differ from a title search? A lien search is also commonly also referred to in the real estate industry as ” lien letters” or “municipal search”. The terminology confuses many buyers and sellers, as the lien search appears to be a duplicated charge similar to a “title search” or “title abstract”. The two searches are fundamentally and materially different.

How does a lien search differ from a title search? A lien search searches in the municipality (town, village or city) for open permits, code violations and municipal liens (water bills, special master cases in progress by the city) and provides a detailed report of any open issues either recorded or “in the progress of being recorded”. That distinction is very important to the client as issues in progress can often be problematic for a new owner who takes title.

A title search searches public records for recorded mortgages, judgments, mechanic liens or anything else encumbering or clouding title to the property. The title search is more a “master search” for large issue and the lien search is a more local search for local problems. Though lien searches can and do often reveal fines as high as $30,000 for abandoned properties or properties with expensive, unresolved open permits.

We recently asked the Brenda Arboleda, CEO of Reliable Lien Search , a long established vendor of our company, the following questions to further clarify to our clients the lien search process:

QUESTION: Why do some lien searches take 1-3 day and others take 7-10 days? ANSWER:  The turnaround of a lien search is determined by the city/county that the records are requested from.  Each office has different time frames based on their infrastructure.

QUESTION: What is the difference in the search process among lien search research? ANSWER: The research involves records of pending issues that are on file with the city/county, but not yet recorded with the clerk of courts.

QUESTION: What kind of issues can be missed in the “quickie” searches that are commonly promoted? ANSWER: These quick searches typically involve verbal and online information to avoid the length of processing time involved in obtaining letters from the city/county.  Open balances for special billing, code fines, and permit fees can be missed if a thorough search is not done by the county.

A lien search typically costs around $130-$180 and takes an average of 5 to 10 business days to complete, depending on the municipality. The lien search is often also included in the inspection period on the contract and buyers need allow sufficient time for the lien search process to be completed to be able to address any issues with the seller that may arise. See a sample lien search here.

For more information on lien searches or other closing issues, please call us at 305-271-0100×701 or info@theclosingcompany.net

Legal disclaimer: The Closing Company, Inc. and blog post is not a law firm and is not providing legal or tax advice.  For legal advice, please consult with a licensed Attorney. For tax advice, consult with a CPA.