The Municipal Lien Search: Protect Yourself!
Most of us in the real estate industry know about title insurance. However, the title commitment will not disclose certain issues that may turn into a delor de cabeza, as the Spanish saying goes.
To find out about issues that could cost lots of money to correct, ask the title agent to perform a Municipal Lien Search (MLS). You should do this before you’re even under contract. The MLS will tell you if there are any permit, code enforcement or utility issues associated with the property.
Prevent this scenario: You have already closed on the property and find out there was work done to the property without a permit. You are responsible for contacting the proper governmental authority to obtain permits (and will probably pay a hefty penalty) or, that authority may force you to remove entire areas of a home because the improvements were built without permits and are now a code enforcement violation! We have seen non-permitted rooms and entire floors!
You also do not want to find out after closing that utility bills are still owing from the prior seller and there is a utility lien on the property. In worst-case scenarios, Sellers have claimed they had no knowledge of an outstanding utility bill from the prior owner, and those former owners are deceased or have moved and are very difficult to locate. Thus, the Seller is left with no recourse but to pay off the lien.
Bottom line: spend the extra $75 – $150 and purchase a Municipal Lien Search before you contract!