When you’re buying a house for the first time, you may not be aware of the concept of a municipal lien. In fact, you may just believe that as long as your mortgage loan is approved, you’ll be set to go ahead with the sale. But there are issues that need to be taken care of on the seller’s end as well. That is why a property lien search must be done before you get too excited about your upcoming purchase.
Even if a buyer has the available funds and a seller is ready to sell, municipal lien letters could prevent a sale from taking place. But many people don’t even know exactly what liens are. Let’s explore what a lien actually is and what you should expect if a lien has been placed on a property that you’re interested in buying.
What Is a Lien?
A lien is essentially a way of preventing a homeowner from moving on without paying their debts. Municipal lien letters will typically be issued after a homeowner fails to pay their proportional share of a public improvement that specifically benefits the owner. Therefore, if the owner’s property was improved thanks to a community project executed by their municipality, and the owner then failed to pay their real estate taxes or for whatever they owed the municipality, a municipal lien might be placed on their property.
A lien can also be placed on a property after a homeowner fails to pay for services provided by a contractor. This lien functions in a manner similar to a municipal lien. The point of a lien or other violation in a similar thread is to keep the offending party from selling a property until their debts are settled. Unfortunately, this can obviously affect your ability to buy the property.
An issue with these liens is that homeowners sometimes legitimately don’t know that they exist. A lien could have been placed long ago, with the homeowner believing that it was resolved — many homeowners are, after all, unaware of the existence of liens until they attempt to sell their homes. Additionally, a lien could be placed on a property just before a homeowner agrees to sell a home. Liens are sometimes missed by buyers when they attempt to buy homes, and the issue essentially slips through the cracks. Therefore, these buyers become responsible for the liens on their property even though they did not take out the debts in question.
How Do I Find Out About Liens?
The last thing you want is to be one of those buyers who takes responsibility for liens that are not their fault. This is why it’s so important to conduct a search so that you may become aware of any municipal lien letters or other types of liens on the property. Fortunately, there are lien search companies that can help you navigate your investigation, which can be somewhat complex.
Typically, municipal lien letters and other records relating to liens can be found at county recorders’, clerks’, or assessors’ offices. The name of the property owner, as well as the address, are usually needed to begin this kind of investigation. At times, however, there are issues to consider like unrecorded liens. The reality is that some liens can be rather difficult to find, and before you visit offices in person, you should simply contact a title company to help you find the lien. Without the lien itself, you can’t be sure about its circumstances and who needs to be paid.
How Can Liens Be Removed?
Usually, liens need to be paid in order for them to be removed. You obviously can’t force a seller to pay their debts. However, in some cases, liens are unjustly placed on homes, and this can be uncovered as you research the liens. Additionally, liens can be paid off through the proceeds of a sale, so if you’re willing to pay more for a property, you can essentially help a homeowner pay off a lien.
Liens are frustrating to deal with, but they exist for a reason. Make sure that you know about any existing liens before you commit to a property.