Buying property in Florida can be complex, with potential claims from third parties, including municipalities. These municipal liens, often unknown to both buyers and sellers, can cloud property titles and lead to unexpected financial liabilities for new owners. A thorough municipal lien search is crucial to uncover these hidden debts before closing.
Understanding Municipal Liens
A municipal lien is a claim against a property for an unpaid debt owed to the local municipality. These debts can stem from services like trash removal, water, and sewer usage. If a seller fails to pay these debts, the buyer can become responsible for them after the sale, potentially facing foreclosure if the lien remains unpaid.
Why a Municipal Lien Search is Essential
While a standard title search examines county records for recorded liens, municipal liens may not be filed there and are typically excluded from title insurance coverage. A municipal lien search, usually costing less than $500 and taking under 10 days, provides a written report detailing all municipal claims against the property. This proactive step can prevent significant financial and legal headaches.
Key Takeaways:
- Municipal liens can remain unrecorded in public records, bypassing standard title searches.
- Title insurance generally does not cover municipal liens.
- Buyers are liable for municipal debts even if unaware of them at the time of purchase.
Eleven Reasons for a Municipal Lien Search
- Property Taxes: Uncovers unpaid and delinquent property taxes.
- Unrecorded Municipal Debts: Reveals fines for ordinance violations.
- Unrecorded County Debts: Discloses unpaid county-assessed debts.
- Building Code Violations: Identifies fines for building code infractions.
- Open City Permits: Highlights permits that are still active at closing.
- Expired Municipal Permits: Shows permits that have expired.
- Special Assessments: Uncovers legally binding assessments not recorded in land records.
- Water Utility Balances: Reveals unpaid water bills.
- Sewer Utility Balances: Identifies past-due sewer service charges.
- Solid Waste Utility Balances: Reports outstanding trash removal fees.
- Storm Water Utility Balances: Finds unpaid storm water management fees.
Reliance on Professionals and Title Insurance
While real estate agents and closing agents may recommend municipal lien searches, buyers are ultimately responsible for investigating these claims. Standard title insurance policies protect against recorded information but typically exclude unrecorded municipal liens. Therefore, buyers cannot typically sue agents or title companies for failing to uncover these specific debts.
Legal Recourse and Expert Advice
If a buyer faces unexpected municipal lien claims after closing, they may have limited recourse against the real estate agent or title company. Legal action against the seller might be possible depending on the circumstances. Consulting with a Florida real estate attorney is advisable to understand legal rights, challenge the validity of liens, and navigate potential foreclosure threats.