Tag Archives: liens

How to Choose Which Type of Title Search to Get

Do you need a title search but you’re not exactly sure which type to get? There are a couple different options as to how you can approach getting a real estate title search. You can have a professional examiner prepare a certified title abstract for you. You can do the search yourself. Or you can buy a basic electronic data report from an online website. So how do you decide which way to go?

First you need to ask yourself what the purpose of this search is. Do you need accurate, detailed information for a legal purpose or because you are considering buying a property, or do you simply want a title search done out of curiosity. Then, ask yourself if it is okay for the report to have some missing information. If you’re making a decision about a several hundred thousand dollar property, for example, you may want to make sure the due diligence is as complete as possible. Also, determine what your budget is for a title search because the prices vary.

When you know the answers to those questions, consider your main options:

  1.  Certified Title Search: A full certified title abstract prepared by an examiner will have the most complete and accurate information. However, it is the most expensive option and may cost up to several hundred dollars, depending on the type of property and search. Yet, you are getting what you pay for. If you need an extensive and precise title search, this is the way to go. All liens, mortgages, current property ownership information, tax assessors’ records, judgments and other encumbrances will be provided and copies of the official documents are available. For more information, read The Difference Between a Certified & Non-certified Title Search or What is a Title Search & Why do You Need One?
  2. Basic Title Search Report: A basic report from online web-sites may not have as much information as a full certified title search, but it will be cheaper. For example, LienList.com offers a basic search for $69.00. It includes a legal description of the property, purchase mortgage data, liens, tax assessors’ records, and grantor/grantee listings for the current ownership.
  3. Do It Yourself: If you do not want to spend money on a title search then you can do it yourself. However, it might take six or seven hours going through documents in various land records offices to do so. Most people who do a title search themselves will actually get about ninety percent accuracy. So, if there is no room for error on your title search you might want to hire a professional. If you still want to do your own title searching, spend the time learning how to do a search correctly, that way it’ll be close to what a professional title examiner would present to you on a certified title abstract. To learn more, read Do It Yourself Title Search.

Understanding Mechanic’s Liens

house constructionA mechanic’s lien is a very particular type of encumbrance on a property that’s afforded credit and protection for a contractor or other builder that’s done work on the property. It is a process enacted usually by statute in a state where it protects contractors or builders for doing work on a property when they don’t get paid for it.

In many states a mechanic’s lien doesn’t even need to be filed as an official document in order to protect the general contractor. For example, if a contractor installs a new roof on a house and the property owner doesn’t pay the bill, a mechanic’s lien is in place even before any paperwork is filed. The person who completed the work on the property is thus covered for any forgone payment of their services.

Additionally, many states extend protection to subcontractors or companies that have delivered materials or provided labor to a project even if it was managed by a general contractor. If a property owner pays a general contractor for work done to their property and the general contractor doesn’t pay any subcontractors, even though the general contractor was paid in full by the property owner, that property may be encumbered by a lien placed by a subcontractor who didn’t get paid for his work.

However, this is not always the case; mechanic’s liens vary due to state laws. For example, in California there are certain filings that must be made for a mechanic’s lien to be valid. A subcontractor that wants to assert a mechanic’s lien must have previously served the owner, and original contractor or construction lender if necessary, with a “preliminary 20-day notice” stating what is being done on the property. Failure to properly serve a 20-day notice essentially renders any mechanic’s lien invalid. Once the project is complete contractors and subcontractors only have 90 days to file a mechanics lien. However, there are a couple exceptions to that 90 days rule. For instance, if the property owner files a Notice of Completion within 10 days of the project being finished it will shorten the time for a mechanics lien to be filed by a general contractor to 60 days and 30 days for subcontractors.

If you are a property owner and are doing any sort of remodeling, be sure to check what the laws are for mechanic’s liens in that state. In addition, if you are purchasing a property in a state which doesn’t require mechanic’s liens to be filed, you should see what work has been done on that property recently, make sure all contractors and subcontractors were paid and that no mechanic’s liens are in place. A standard title search on a property would indicate if there is a mechanic’s lien placed on the property, along with identifying any other current liens.

Hidden Property Liens

If you are going to spend time looking for liens on real estate you don’t want to just get the most basic obvious liens, you want to make sure you are getting every lien there is, including the hidden liens. There are many types of liens but here are the seven most common types of hidden liens.

UCC Filings – Also known as universal commercial code filings, these are normally not filed in the land records office but rather with the secretary of state. If you are looking in the county records you may not find UCCs that exist for the property. The secretary of state may have a filing that can encumber the personal property.

Mechanics liens – These are liens and encumbrances that occur when a contractor, builder, or an individual does work on a property, for example putting on a new roof, and if the property owner did not pay for the roof then the contractor has a lien by statute on the property even if there is nothing filed in land records. This is the law in many, but not all, states. Most counties have a very specific procedure for the contractor to be protected on their efforts in improving that piece of real estate.

Civil court records – A property owner could have a judgment against them personally that automatically attaches to their property by statute. If this were the case it would not be stated in the land records. You would need to look in the civil court records, small claims and superior court to find something like this.

Probate records – Probate records can put encumbrances on a property. If there are transfers of property by statute, in the case of death or divorce, then that can affect the property and have liens accrued to the property.

Delinquent taxes –If you check the tax assessor’s office you may find that there are past due taxes on a property. If someone were to buy a property now and the previous property owner did not pay their property taxes for the previous year the new owner would be responsible for paying those delinquent taxes which could potentially be thousands of dollars.

HOA underfunding – If you are buying a house in a homeowners association or a condo complex and that complex has obligations like fixing the pool or paving the streets and they have not accrued money in their budget over the years, that HOA underfunding becomes a defacto lien on the properties because whoever owns them is going to have to pay for it when it comes due.

Easements – If you look at a property’s mortgages and deeds you may not find that there are current easements that allow adjacent property owners to have access to your property or even financially benefit from it. Generally, easements are written and recorded with the local assessor’s office so you would need to look there for any existing easements.

Once a lien has attached to a property there are very specific methods to have that lien removed. One way is to have the lien holder actually sign a release of lien that has to be filed in the land records. Until it’s filed, it will still show up on the title search. Another way is by statute. There are certain types of liens that automatically become inactive after a certain period of time. This depends on the type of lien, the statutes of the county, and what the laws were when the lien was filed.

When looking for liens on a specific property, remember to check for UCC filings, mechanics liens, the civil court records for judgments, probate records, delinquent taxes, HOA underfunding, and easements.