Due diligence varies from state to state. Many jurisdictions have unique laws that affect real estate transactions, and in Florida, you need to be aware of municipal liens and the super-priority of tax liens.
If your client is thinking about purchasing a property in Florida, particularly a foreclosure or a short sale, they should be advised to perform a municipal lien search. Why? In Florida, many unrecorded liens, fees, and similar permit violations are attached to the property, not to the individual, as it is done in most other states. As a result, nearly all Florida real estate transactions require a municipal lien search as part of the closing.
This will become increasingly important thanks to the 2016 ruling allowing Florida state to keep liens on zombie properties (those which have been abandoned and left with lien debt), even after being sold through the judicial process. This is critical because Florida has the third highest number of zombie homes in the nation, reporting 1,963 in 2017.
Don’t let your client get stuck with surprise post-closing costs. Here’s what you need to know about doing the proper municipal lien search.
What is a municipal lien search?
A municipal lien search allows you to find unrecorded liens, in addition to code violations, special assessments, utility, and open or expired permits issues that are associated with residential or commercial real estate. This is a critical part of the process, as there are often unknown or undisclosed fees, costs or other issues that impact a buyer post-closing.
Failure to catch these problems early on through a municipal lien search means that the buyer would be responsible for resolving pending items such as outstanding fees or bringing a property into compliance, the latter of which could be especially time-consuming and costly.