Municipal Lien Search: 9 Things (2024) You Must Know

During the municipal lien search process, landowners in the U.S. search for any outstanding debts or obligations that may be attached to a property.

Knowing whether there are any unpaid taxes or code enforcement violations is an essential part of your due diligence as a buyer.

So, if you’re considering buying or selling a property or applying for a mortgage or loan, keep reading.

This blog will take a closer look at the process of municipal lien search and how landowners can navigate this process the right way.

1. What is a municipal lien search?

A municipal lien search is defined as a process of investigating a property to uncover any existing liens or outstanding debts that may be owed to a municipal government.

Prospective landowners will have this search conducted by a third-party company that specialized in this work.

If they exist, a municipal lien search will reveal open or outstanding code enforcement violations, unpaid property taxes, or other liens or encumbrances.

2. Why is this search important?

Buyers undergo this process for several reasons.

The primary and most significant purpose is that it helps protect them from purchasing properties that have hidden debts or liens.

If a landowner were to purchase a property without knowing of these obligations, then it could cause complications.

They would legally take these encumbrances on (without realizing it) and need to go to court to resolve them.

This is not only an expensive route, but it could also result in the loss of the property.

Conversely, sellers use this search process to help them resolve outstanding issues with the property before they put it on the market.

If you’re a seller who wants to ensure you don’t have any liens, violations, encumbrances, unpaid taxes, etc. before going through the sales process, this is an easy way to do it.

Additionally, doing this can increase the value of your property.

Finally, lenders often require this search to be completed by anyone applying for a mortgage or loan.

Lenders like to see this completed before approval as having debts or liens attached to a property can affect the borrower’s ability to repay.

3. What does a municipal lien search involve?

This search involves a complete investigation of a property’s history.

It includes tax and code enforcement records that could reveal any past issues.

Typically, it is a third-party company that will conduct this search and compile a report with any existing liens or obligations founds.

On the report, you can expect to see the following information.

bulletUnpaid property taxes

bulletCode enforcement

bulletLiens

bulletEncumbrances

bulletDetails on any pending or upcoming assessments or taxes that the property owners may be responsible for

4. How can landowners navigate the municipal lien search process?

The best way for landowners to navigate the municipal lien search process is to hire a reputable third-party company that conducts this type of work.

They will know what to look for because they have experience working with municipal governments.

There is a fee associated with this service.

Typically, municipal lien searches cost between $100 and $200.

This fee is because the searches can be time-consuming and require access to government records.

It is also important to note that municipal lien searches do not guarantee that there are no outstanding debts or liens attached to a property.

That said, this process does help you begin the due diligence process and reveal any potential issues prior to larger challenges arising.

5. Why doesn’t a title search find municipal liens?

The results that a municipal lien search finds aren’t exactly liens.

As noted above, the following are among the information that this search normally turns up:

bulletThe current utility unpaid account billing or unpaid bills

bulletOutstanding assessments for services such as water and sewer hookups, road improvements, lighting, and other public amenities

bulletPending code violations

bulletPermitting history

None of these items are liens because they aren’t recorded in the public land record.

However, your local authority can record it as a lien, so they can recoup their cost.

Furthermore, the debt associated with these items will attach to the property (not the individual owner or account).

But since these aren’t formally recorded, a title search won’t find any of these issues.

6. Do municipal liens impact a property title?

The two terms you may hear when handling due diligence on your property title are “clear title” and “marketable title.”

bulletClear title means there are no defects that would jeopardize a new owner’s claim to possess and use the property.

bulletThe marketable title means the seller guarantees to the buyer that the property carries no substantial risk of litigation or encumbrances that could negatively impact the buyer.

Municipal liens are issues attached to the property.

They become the responsibility of a new owner — regardless of whether or not they knew they existed.

This is why it’s so important that buyers do this due diligence before purchasing a property.

However, municipal liens don’t necessarily render the title of the property “unmarketable.”

So, although a title may not be clear of defects, a buyer may be willing to purchase a property as-is.

This means the property (and its title) is still marketable.

Regardless, it’s important to do your due diligence as a buyer and clear up any issues with your title as a seller before putting your property on the market.

This will give your property the best chance of selling.

7. How do you conduct a municipal lien search?

bulletFind out the property’s municipality

This step helps you verify with the property appraiser which governing authority files code violations on the property you’re interested in purchasing.

An example of the property’s municipality is the county.

You’ll be able to find this information on the county property appraiser’s website.

You’ll need to know the address, property owner, and parcel control number (also called the Property Identification Number or PIN) in order to search the property on this platform.

Once you find the property, you should confirm the legal description in the results and match what is found in the title commitment.

The legal description serves as the main identifier for the property, but most property appraiser websites won’t allow you to search using this criterion.

So, just make sure you double-check it once you think you’ve found the right property.

If you see the municipality listed as “unincorporated,” this means the county is the governing authority.

They have the right to file any code violations on the property as well as administer permits.

Sometimes, they will also manage utilities (covered in the next section), but this is not always the case.

You’ll need to double-check this as well.

bulletVerify whether the property’s utilities are managed by the county, city, etc.

Understanding who manages the utilities allows you to reach out to the proper resources.

Utility services like water and sewer on the property may or may not be managed by the same entity with a right to a lien on a property.

To ensure all service information is requested from the correct provider, you should call to confirm that the municipality services the property’s address for all utilities.

In some cases, the property may be serviced for water by one municipality and sewer for another.

Sometimes, municipalities aren’t able to give verbal confirmation over the phone.

If this is the case, request the information in writing about where the property lies within the service area.

bulletResearch the annexation history of the property

Even after confirming the current municipality of the property appraiser, you may need documentation from the former governing municipality to ensure there are no open code violations or expired permits.

This can occur if the property was previously within the county’s jurisdiction and was then annexed by a nearby city, town, or village.

Fast-growing states with expanding populations will often have annexation occur.

If you’re looking to see if your property has been annexed, we recommend searching the county’s GIS (Geographic Information System) map.

bulletDetermine which governing authority can levy special assessments

Special assessments include stormwater, streetlights, road paving, and other community improvement assessments that impact the property.

These assessments may be managed by a county or city like water in sewer depending on where you are.

In some counties, there are “Assessment Districts,” which are also known as Special Taxing Districts.

In these districts, most property owners have agreed to allow the municipality to provide public improvement and special services.

Some of these special services include:

bulletStreet lighting districts

bulletSecurity guide districts

bulletMulti-purpose maintenance districts (landscaping and other community maintenance)

bulletCapital improvement districts (one-time upgrades and improvements to water, sewer, drainage, utilities, and other roadway improvements)

The authority may be the city, country, etc.

This knowledge will also be helpful in your search to find out whether there are liens on the property that will need to be taken care of.

bulletRequest information from the appropriate departments in your municipality to conduct your search

At this point, you’ve taken the steps to determine who to ask for information.

Now, you can make your requests to your municipality’s departments according to their procedures for lien searches.

For instance, you may be required to send an email or fill out a form.

Here is what a full municipal lien search will include:

bulletProperty and tangible tax overview

bulletSpecial assessments

bulletCode enforcement history

bulletPermitting history

bulletUtility information

Depending on the municipality you reside in, the cost of this process may vary.

If you don’t want to conduct it yourself, some companies can provide the service to you.

The cost to do it yourself is likely cheaper, but having someone do it on your behalf will be more convenient.

Having a municipal lien search done correctly is a critical step that will allow you to avoid the fees and costs associated with outstanding debts or other challenges that can pop up after closing on the property.

If you’re not prepared to go through this process alone, don’t be afraid to hire a local experienced company.

8. Can you do the search yourself?

Absolutely!

To do so, you must know who the utility providers are.

If you have this information, you can call and ask if unpaid utility bills stay with the name on the account or if they stay with the property.

If the former is true, then the previous owner will remain responsible for them.

If the latter is true, then you’ll need to ask for a property lien search and pay the utility company for this report.

You’ll need to follow this process for every single utility on the property in addition to the building permits and code enforcement with the appropriate municipalities.

If you’re purchasing in a different city than the one you are currently familiar with, you’ll want to make sure you’re calling the correct utility companies and have the right municipal jurisdiction for codes and permits.

In some cases, you’ll need to call various companies before you locate the right provider.

Keep in mind that this process can be tedious and time-consuming.

If you don’t have abundant time on your hands, consider having the municipal lien search process done professionally.

In some cases, you can even negotiate your closing costs to have it included.

We suggest seeking out a company that guarantees their product.

This way, if the report misses something, then you won’t be liable for it.

9. What is the difference between a municipal lien search and a title search?

Title searches and municipal lien searches both contain information associated with an individual or property.

However, the core difference is that title searches allow you to focus on the property chain of title.

The municipal lien search will only look for municipal or county-related liens.

While both searches are essential, we recommend starting with the title search and moving on to the municipal lien search.

Final Thoughts

If you’re gearing up for the land-buying process, consider municipal lien search as part of your due diligence.

Whether you’re buying a property, selling land, or applying for a loan, making sure the property is free from hidden obligations or debts is crucial.

We recommend hiring a reputable third-party company to conduct a search, so you can navigate the land-buying process with both confidence and peace of mind.

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Erika Gokce Capital

Disclaimer: we are not lawyers, accountants or financial advisors and the information in this article is for informational purposes only. This article is based on our own research and experience and we do our best to keep it accurate and up-to-date, but it may contain errors. Please be sure to consult a legal or financial professional before making any investment decisions.

Erika

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