BUYER BEWARE – IS YOUR CLOSING AGENT PUNTING?
Some closing agents are electing not to perform certain work in connection with their closings, such as ordering municipal lien searches, conducting open permits searches, and researching possible code violations. Instead, they are placing this onus directly on the buyer, but unfortunately are not telling the buyer that they are doing so until the closing date (when it is far too late to conduct this critical research). In fact, some closing agents have gone so far as to have the buyer execute documents to hold them harmless should there be any unrecorded municipal liens, unrecorded charges, permit issues, or code violations.
A municipal lien search determines whether there are any unrecorded municipal liens arising by virtue of unpaid utilities, service charges, assessments, ordinances, waste fees, etc. These unrecorded municipal liens can be foreclosed by the municipality or county just like a lender can foreclose a mortgage. Open permit searches can identify if the improvements one is buying are legal or not, and researching code violations can insure that hefty fines do not exist that run with the property. It is of utmost importance to verify with your closing agent up front that the closing agent is performing these vital searches rather than finding out at the closing table that the closing agent expected you to do so.
Do not assume that your title policy will protect you as the buyer. When a closing agent fails to perform these searches, the buyer should understand (and the closing agent should clearly disclose to the buyer well in advance of the closing) that the following exception will appear in the buyer’s owner’s title insurance policy:
“Any lien provided by County Ordinance or by Ch. 159, F.S., in favor of any city, town, village or port authority, for unpaid service charges for services by any water systems, sewer systems or gas systems serving the land described herein; and any lien for waste fees in favor of any county or municipality.”
In other words, if you see this exception in your policy, that means you have no protection against these liens. The aforesaid exception may be deleted by the closing agent only if the closing agent performs a municipal lien search.
Fortunately, most reputable closing agents perform this service for their buyers, but you should always ask up front. As always, if you have any questions concerning the foregoing, we urge you to consult with your real estate attorney.
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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