Clean Titles and Peace of Mind: The Importance of Lien Searches in Real Estate Transactions

Jul 20, 2023 | Holding Title

Due diligence is an essential part of any real estate transaction, and one critical step in due diligence is having a lien search. A lien search is an investigation to determine whether a property has any liens against it. Click here to learn more about liens and lien searches. With this post, we will cover reasons why lien searches are essential for real estate transactions.

Tennessee Real Estate Market Watch

Tennessee’s median home sale price in May of 2023 was $344,900. However, real estate trends are always changing. If you need title services when buying or selling a home in Tennessee, click here to contact us.

5 Reasons Lien Searches are Important for Real Estate Transactions

Secure Financing

Most buyers need loans to finance real estate purchases, and lenders typically require a lien search for approval. With a mortgage, the property is collateral for the loan. A lien search can ensure a clear title and protect the lender’s investment in the loan. It is also a step toward securing a lender’s title insurance policy.

Identify Liens

The primary purpose of a lien search is to identify any liens that may be on the property. Identifying liens can be useful for several reasons. It can give the seller a 

chance to clear the debts. It can also help buyers assess any financial obligations associated with the property. It could include unpaid mortgages, back taxes, past-due utility bills, etc.

Avoid Buying Property With a Lien

If you buy a property with a lien against it, the lien transfers with ownership. That means the new owner would be responsible for the debt. It could also result in a foreclosure after the sale. Performing a lien search can protect against purchasing a property with a lien. Owner’s title insurance can also cover buyers if they buy a property with a lien without knowing it.

Prevent Legal Issues

A lien can be a significant problem for a property owner. Buying a property with a lien could lead to a legal dispute with the lienholder. Under the worst-case scenario, you could lose the property. Even if you don’t lose the property, defending these claims can be time-consuming and costly. It is another reason to consider owner’s title insurance. The insurance company can pay claims and arrange a legal defense.

Protect Your Investment

Real estate purchases are usually for significant sums of money. You could lose your investment if you purchase a property with a lien. A lien search is a simple way to prevent this type of financial loss.

Title Services in Tennessee

Do you need a lien search for a real estate transaction? Click here to contact Title Group of Tennessee. We are title experts offering a complete array of title services to buyers and sellers.

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