3 Types of Lien Searches You Should Conduct Before Buying Property

According to Forbes, about 60% of all homes in America have some kind of debt or mortgage attached to them. While most homeowners generally keep up with the installment payments, you want to look out for the property that despite being on sale could have liens attached to it.

Obviously, a lien search will help you avoid contractual complications and the potential loss of money. Read on to learn about some of the most important lien searches you should consider.

UCC Liens

UCC lien is the commonest property security attached to a business or residential property. Such liens arise from bank financing and trade credit. Arguably, most businesses in the U.S. have relied on loans from financial organizations to offset operational or capital expenses. Despite this, you want to conduct a lien search to ensure the property you are targeting does not have any UCC lien.

County lien letters should help you determine whether the property you are about to buy has uncleared debt. Many creditors understand the complications that arise from lien claims, so they will most likely record a UCC lien in the office of the Secretary of State where the debtor is incorporated.

Your job as a buyer is to go through the official public records and verify that the property is safe to buy. One of the most important things that you want to check is the legal name of the seller. You need to remember that property lien search alone should not deter you from buying the asset. Establishing whether the UCC lien filing has been terminated is just as important.

Tax Liens

Tax liens are typically applicable to businesses such as stores, factories, and commercial apartments. Such legal claims come from failure to pay federal taxes on time or in full. Unlike other kinds of financial claims, tax liens are filed by the IRS against the property owned by a defaulting business.

If you are a potential buyer, you want to avoid buying a property that is tied to tax liens. Once the IRS asserts a tax lien, it files a Notice of Federal Tax Lien alerting creditors that the United States government has a legal claim to any property owned by the business.

You can avoid property attached to such interests by requesting the seller to provide county lien letters. You need to note that every debt-free business property will have a transparent property tax history. Search documents will guarantee any potential buyers that all real estate taxes have been cleared.

While the Federal government is notorious for asserting tax lines, state and local authorities have the legal right to do the same. If you conduct a simple Florida lien search, you will discover that various counties have legally filed lien claims on property.

Judgment Liens

Judgment liens arise from court decisions where one party loses and is required to provide compensation to the other. Most judgment liens are tied to real estate located in the same county where the legal finding is concluded. No closing process is complete without conducting a full lien search to ensure that the seller has not attached the property to any legal matter.

You should ensure that the owner of the property has all the necessary county lien letters before you make any financial commitments. Judgment lien extends beyond land and built property since it allows the winning side to place claims on vehicles and other acquired property.

Remember, the person who buys a piece of property with a lien assumes the full burden. You could lose such property despite paying all the fees to a third-party if you do not conduct a proper background investigation.

Final Word

Given that a substantial percentage of people buying homes in the U.S. is doing so for the first time, a lien search has never been more important. To put this into perspective, about 25% of all homes that were bought in Florida in 2019 went to this demographic. Therefore, requesting county lien letters should be one of your key priorities before making any real estate transaction.

Contact us today if you are planning to buy in property in Florida that is free of liens.