Performing a municipal lien search is crucial when purchasing property in this day and age. In many cases there are unknown or undisclosed fees, costs or other issues that will impact a buyer post-closing. In addition a municipal lien search generally will assist a seller in complying with contractual terms to avoid a default. Examples of issues that have been discovered include pending code enforcement liens in excess of $3,000.00, unpaid utility balances in excess of $5,000.00, and open permits that have not been “closed out” and ultimately fail their final inspection. Ignoring these potential problems by not performing a municipal lien search will result in the buyer having to pay these fees themselves, or worse yet, require the buyer to resolve expensive code enforcement issues or permit issues to bring the property into compliance. This could be very costly and time consuming, and in some cases, could render the property unmarketable.
A common misconception is that municipal liens searches are part of a normal title search. This is not the case. Title underwriters do not perform municipal lien searches and specifically exclude these matters from title coverage. Performing a municipal lien search will aid title agents in removing the standard exception for special assessments, service charges and waste fees from the title insurance policy thereby providing better insurable coverage.
We have used several municipal lien search companies in the past to perform our searches. Our recommendation is to use a company that is adequately insured (i.e., at least $500,000 E & O coverage), understands the hierarchy of various governmental departments, provides a quick (48-72 hours) and easy order process (e.g., online orders), and produces a well-organized report for distribution to the parties at a reasonable cost (e.g., $100 – $150).