Performing the due diligence for a real estate transaction can be time-consuming and costly. Some buyers might skip certain steps to speed up a transaction or save money. However, some stages of due diligence are vital for protecting the buyer from various risks. One critical step in due diligence is having a lien search.
What are the risks of skipping a lien search? Read this post to learn more!
Tennessee Real Estate Market Watch
The average price per square foot of a home in Tennessee during May 2023 was $138.62. However, real estate trends can change quickly. If you need help with title services for buying or selling a home in Tennessee, click here to contact us.
A lien search aims to uncover any existing liens or debts associated with the property. If you skip the lien search, you might miss a lien that could affect ownership rights. It could be unpaid taxes, construction liens, an old mortgage, or other debts. If you buy a property without knowing about a lien, it could cause problems in the future.
What happens if there is a lien you don’t know about on the property? There is the potential for a legal dispute. When you buy a property, the liens come with it. The lienholder could choose to file a claim for the property. As the owner, you will have to defend against the claim. The defense can be costly, and there is no guarantee you will win.
Resolving liens can be expensive. You will have to pay for a legal defense against the claim. As the owner, you might have to pay the debts associated with the lien. If you don’t settle the lien, you could face foreclosure on the property. Failing to discover a lien before buying can result in significant financial losses.
Buying a property with hidden liens could lead to title or ownership issues. Even if the lien doesn’t cause a problem while holding the property, it could be an issue if you sell. If the buyer performs a lien search and finds the liens you didn’t, they won’t want to buy. That means you’ll have to clear the liens from the title before you can sell it.
You’ll have difficulty finding lenders that won’t require a lien search. The property will serve as collateral for the loan, so lenders will want a lien search to protect their investment. A lien search will also be a requirement for obtaining title insurance.
Do you need a lien search for a real estate transaction in Tennessee? Click here to contact Title Group of Tennessee. We offer title services to help buyers and sellers with real estate transactions.
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