How Do You Know if There Is a Lien Attached to a Property?



If you are considering buying a property, whether residential or commercial, you have to always exert due diligence. You have to know what is actually owed on a property, as some owners will go out of their way to hide certain debts from you. In fact, you need to know about this before you even make an offer or start to invest any money in the property. If you are also considering ‘seller financing’ or ‘owner carry’, it is even more important that you do this properly.

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Very often, an investor will use title resources in order to check on the background of a property. This will enable them to see what the condition of a property is before they decide whether or not to buy it. In so doing, they make sure they don’t get nasty surprises when they actually close the deal. On these searches, they look at whether or not any property liens are attached to the house they want to buy. A property lien can be either voluntary or involuntary liens. An involuntary lien, for instance, could be a judgment or tax lien. During escrow, these issues have to be resolved and you should never close on a property until they have.

There are a number of online resources that you can use in order to get your hands on this type of property information and data. Essentially, they can provide what is known as a ‘preliminary title report’, which you can access almost instantly, instead of having to way several days for a local title company, who you will also have to pay around $300.

Tips for Using Property Lien Information:

  1. Always look for the most comprehensive title information and property records for vesting and legal, lien and sale detail for land, ownership, commercial and residential property.
  2. Use search features so that you can find property assets in any state, using name or location details. Check the judgments, the tax liens, foreclosure activity, bankruptcy and 1st and 2nd mortgages as well.
  3. Look into the foreclosure activity of properties and see at what stage of foreclosure it is in if applicable. Stages include REO (bank owned), auction, pre-foreclosure and notice of default. Usually, if there is an auction, the location and date of auction will be included, as will the bank and trustee contact information.
  4. Understand that the value of real property is based on comparable sales in a subdivision, neighborhood or radius. The valuations of a property will take into consideration FSBO (for sale by owner), recorded sales and MLS (multiple listing service).
  5. Make sure that both you and/or your clients have due diligence power. This will enable you to make offers that are properly calculated based on the existing mortgages, existing liens, historical data, and the equity position of the seller. Never make an offer on a property unless you know how much – in total – is owed on it.
  6. Do not subscribe to any lien search facilities that require you to sign up to any kind of contract or monthly subscriptions. After all, you may only need to run a single search, or you may end up searching for many years. Use something that is convenient for you.
  7. Only sign up to a service that has nationwide data available and that has support staff there to help you around the clock as well.
About Violeta-Loredana Pascal

Violeta-Loredana Pascal has over 10 years of experience in PR, marketing and communication, and has been running her own PR agency, PRwave INTERNATIONAL for 7 years. She is passionate about reading, blogging and traveling – see Travel – Moments in Time. Follow her on Twitter - @violetaloredana (Romanian and English) and @TravelMoments (English only).