4 Huge Lien Search Trends You Need to Know About

I can’t be the only one who gets nostalgic this time of year. If you’re like me, you’re looking back on the “year that was” and trying to figure out just what you can take away from it as 2017 quickly approaches. It’s the same in this business. 2016 brought a lot of changes in the lien search world and we’ve compiled the top 4 things that we think will continue to have an effect on settlement services in 2017.

4 Huge Lien Search Trends You Need to Know About:

1. In Florida, 1-in-5 properties have an unrecorded issue.

This year we analyzed data from thousands of searches and found unrecorded issues on 20% of properties. That could be anything from a code enforcement violation, unpaid utilities, open/expired permits or special assessments, among other issues. This means if you do 10 closings a month and you’re NOT looking for unrecorded property debt or unrecorded liens, 2 of your files could come back to haunt you.

2. Municipal Lien Searches are becoming the “norm” everywhere — even in places that have long ignored them.

We’re looking at you, North Florida! In 2015, when we’d visit places like Jacksonville and the Panhandle, we had title agents and real estate attorneys flat-out say, “we don’t do that here and we don’t have to, because no one else does.” Sorry to say, that logic doesn’t hold up anymore. Every day, it gets harder to ignore the fact that there are hidden property issues that leave your clients and YOU at financial and legal risk. Don’t forget that it wasn’t too long ago that only people in South Florida/Miami did these searches. Now most closers wouldn’t imagine NOT ordering one or doing it themselves.

In fact, in 2017, the Northeast Florida Association of Realtors (NEFAR) recently updated the standard purchase and sale agreement to reflect the need for a municipal lien search. You can find the updated NEFAR purchase and sales agreement on page four under the closing costs section. Title agents, real estate agents, and real estate attorneys should be aware of the new line item. Realtors and buyers’ agents especially should know about this search for unrecorded property debt and other issues not covered in the title search and educate their clients about how it protects their interests in the property.

3. Municipal departments that would never lien are starting to.

In 2016, we saw many >municipalities start to lien for unpaid utilities and code violations. Why is this happening, you ask? These muni’s are beginning to catch on that when they actually lien, they’re more likely to finally get paid.

We know that Manatee and Sarasota Counties could start liening for utilities because the governor has already given them the authority. It’s just something that we’re waiting to see happen because it’s only a matter of time.

In fact, a lot of places say they reserve the right to lien for these issues and will from time to time. Examples include the City of Fort Myers, Boynton Beach, and Tampa, where we’ve seen this happen over and over again.

4. Municipalities are more eager than ever to recoup fees.

This is especially true when it comes to outstanding utility bills because these are based on consumables and services that have already been delivered. Properties across the state carry millions of dollars in fees and liens — and municipal departments are sick of not getting paid.

According to this article in the Sun-Sentinel, The mayor of Delray Beach has openly criticized lien reduction or amnesty programs because it makes liens less effective for recouping payments, and the city has actually hired private collections companies to help them get those fees paid.

What do these trends mean for you?

If you’re already protecting yourself and your client by ordering a lien search or doing the search on your own, you should be reassured that you’re doing the smart and prudent thing.

However, if you’re someone who skips this part, assuming the title report will reveal all issues, be aware that it’s becoming increasingly hard to ignore the risks associated with ignoring this piece of due diligence.