The Importance of a Municipal Lien Search!
When purchasing a home it should be expected that you get the property free and clear without taking on any defects from a previous owner. Title insurance companies will provide a title search on the property which will show you all items that are “recorded” against it. But what happens when there’s problems that have not been made of public record, and whose responsibility are they? Few people are aware of the hidden defects that a municipality can attach to the property and potentially cost the new homeowner hundreds to thousands of dollars in repairs and corrections. And even more unfortunately not all real estate agents are knowledgeable about this or protect their customers by recommending a Municipal Lien Search to be done.
What is a municipal lien search?
A municipal lien search will investigate unrecorded special assessments from the City, opened and expired permits, municipal liens, taxes and utilities associated with the property. The standard FAR/BAR contract widely used by Florida Realtor’s has a provision stating that in the Miami-Dade/Broward counties the sellers will provide a municipal lien search for the buyer. However it does not have that requirement for any other county within the State. When recently checked there were over 32,000 open permits in Dade County due to the damage done by Hurricane Andrew. The Central Florida area does not have nearly that amount therefore it’s not a requirement for the sellers to provide a municipal search on their property. Only an experienced Realtor will not only suggest to their buyer to have one done, but also word the contract accordingly to protect their buyer.
In my experience as a Realtor I’ve seen lien searches come back with outstanding utility bills from not only previous owners, but previous tenants in excess of $500. I’ve seen open permits dating back several years from companies who have gone out of business. Code enforcement violations that resulted in a fine of $7500 AND even after being corrected by the owner, the City had not reinspected the property; therefore the property was still accruing a $100 per day penalty. These are all items that the new homeowner would be assuming the responsibility for IF they had not been brought to the attention of the seller(s). Lien searches vary in cost depending on the municipality but range from $85-$150.00. It’s a small price to pay for something that can possibly save you thousands of dollars and many future headaches.
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