Of all the different steps related to homeownership and property ownership, the property lien search is one of the lengthiest — and the most critical. Yet, a lot of real estate investors — especially first-time investors or those looking to become a new property owner — might not know exactly what this type of search does. It’s important to get the clarification you need from a property lien search before committing all of that money to an investment purchase.
A property lien search pokes through the history of a property to see any outstanding debts that could transfer over to a new owner. This is a critical part of the title search process, usually going along hand-in-hand with it. While the title search proves that the future owner has the right to purchase the property, the property lien search secures the future owner from any debts or taxes prior owners may leave them on the hook for.
So, what are the steps to take when performing a property search on a property? Let’s take a comprehensive look at them in this blog!
Decide if a Property Lien Search is Right For You
You need to decide if you really want to do the property lien search yourself. The due diligence for a property lien search can go back many years — decades, even, if the house or property is an older one. It involves picking through the public record, poring over federal tax records, exploring tax liens, and looking at just about every legal claim on the property. That’s a lot — and can make any amateur’s head spin.
Your alternative? Go to a title company or a real estate attorney to do a title search and property lien search. You may already have one for the title insurance on the property. Those groups of professionals have the training and experience necessary to get a property lien search done extremely quickly. That option might not be perfect for every real estate situation, but it can work for many.
Step 1: Investigate Your Local Lien Search Makeup
The first step in the process — if you do choose to do the property lien search yourself — is to figure out just how you’re going to do it! On most occasions, you’ll be able to find the information you need at the county recorder or county assessor’s office. Hopefully, there is also a record online of all the information you have to find to do the property lien search. Most local offices have their information online now, but there is a small handful that does not; in those cases, you’ll have to physically go to those offices to pull the documents you need. Try giving the county assessor or county recorder a call to have them walk you through some questions you may have.
You need to know two important terms before you go on to the next step: voluntary and involuntary liens. You need to know the difference to determine which ones you may have to pay!
- A Voluntary lien is exactly what it sounds like — a debt that the owner knowingly takes on for the property. For houses, that’s generally your standard, everyday mortgage.
- Involuntary liens, on the other hand, are debts placed on a property from another party. For example, tax liens (either state tax liens or federal tax liens) are common involuntary lien.
Step 2: Do the Property Lien Search
Once you figure out the property lien search format, it’s time to start looking! Find the property you’re looking to invest in and start examining all the data you need to sort through. Here’s what you need to look for:
- Outstanding utility bills against the property
- Code violations and permits with fees
- Unpaid taxes, missing property taxes, and other tax liens not satisfied on the property
Those types of liens could transfer from the property’s title prior to the new property owner. In order to make sure you don’t end up owing any money, you need to make sure that all of those liens and debts get fulfilled.
Another important part of the property title search you need to know? A quick property lien search might only show all the recorded, voluntary liens detailed above. Depending on the state the property is in, some of those “involuntary liens” — everything from utility bills to city fees tacked on — might not get recorded. You’ll need to do an in-depth search of the municipal records to ensure that you don’t end up paying some more money in the future.
Step 3: Address Any Lien Issues
If you do find any outstanding liens on the property, you need to get them taken care of before closing on the property. If time is of the essence for the purchase of the property, you can just pay the lien yourself and get a lien release from the city or state government or the private property owner. For an outstanding lien on a house or other property, you can negotiate with the owner or the party to get that removed from their side.
How ProspectNow Can Help
Looking to get more clients to that point where everyone can start to look at liens on a property through a comprehensive lien search? If so, you need the data analysis that makes a difference — and that’s where the professionals at ProspectNow come in. In business for over a decade (since 2008), ProspectNow delivers the insights and data that can give real estate agents the edge they need to compete in a competitive marketplace. With ProspectNow, real estate brokers can close more deals and make more money — all at a fraction of the cost from other, competing platforms!