5 Hidden Liens That Can Derail Your Home Sale

According to statistics from the National Association of Realtors, there were over 6.5 million homes sold in the US in 2020. Existing home sales accounted for 5.32 million transactions. The annual report also showed that new home buyers constituted 31% of all homebuyers in 2020.

Property Liens in Florida

First-timers are often overwhelmed by the documentation required for a successful change of deed, overlooking critical details in the process. One key aspect that they often overlook is a lien search before they can call in the property appraiser.

A lien is simply a legal claim held by a third party against a property. The lien or other violation may encumber title to a property, preventing the owner from borrowing against or selling the property. Liens can quickly complicate the closing process, potentially opening up a legal conundrum if you complete the purchase without accurate lien verifications.

Unlike most states, Florida municipalities can attach unrecorded liens, unpaid local property taxes, mechanical liens, special assessments, and other involuntary liens to a property. You may have to hire municipal lien search companies to help you unearth hidden liens or encumbrances to the home you wish to purchase.

Here are five hidden property liens that you should watch out for.

1. Judgment Lien

Civil court records may have a judgment call that goes in favor of a petitioner, with a lien automatically attached to the property by statute. As such, you may not find the lien in the land records but rather in civil court records, small claims, or senior courts. A municipal lien search company can help you conduct a thorough check to confirm there arenโ€™t any judgment liens attached to the property.

2. Tax Liens

A property appraiser can quickly point out inconsistencies in the payment of property taxes that can lead to encumbrances attached to the home. The IRS tax lien is a federal encumbrance placed on the property that may have lenders shying away from financing your transaction. Requesting a complete tax history can help you establish if there are any tax liens attached to the property before purchase.

3. Child Support Liens

Another hidden property lien that is often overlooked by most homebuyers is the child support lien. It is a claim laid upon the property after the owners fail to honor their child support payments. You may need to check with the civil court records to find the encumbrance before calling in the property appraiser.

4. Mechanics Lien

The renovation works carried out by the property owner may lead to unknown liens laid against the property. The contractor may have subcontracted the work, failing to pay the technicians who then file a mechanics lien against the property. You may need a property lien search company to help you discover any liens attached to the home by contractors that have worked on the property before.

5. HOA Underfunding

If the homeowner failed to honor their HOA obligations, having accrued the dues over time, the underfunding might become a defacto lien on the property. You may have to pay the liens if you purchase the home without carrying out proper lien verifications.

Involuntary liens attached to a property that you want to purchase can be hard to locate. You may require the assistance of professional Florida lien search companies to locate the encumbrances. To discuss your property lien search needs, reach out to Florida Lien Search.