In last week’s blog post we discussed the importance of searching tax lien records as part of your pre-funding due diligence search efforts. This week, we’ll go over a few tips for ordering tax lien searches to achieve the best results.
There are three important things to keep in mind when searching for tax liens. The first is the scope of the search. Most tax liens are effective for a period of ten years and can be renewed. So you will want to instruct your searcher to perform a ten year search, minimum, of the tax lien records to ensure all active liens would be picked up.
Secondly, tax lien filers are not held to the same strict standard as a UCC filer with regard to debtor names. UCC filers must list the exact legal name of their debtor in order to ensure the effectiveness of their filing, but there is no such requirement for a government agency filing a notice of tax lien. Confirm with your searcher that they will report tax liens on similar names in case a notice was filed under a name variation for your applicant.
Lastly, you will want to be sure to search the correct filing office. Depending on the jurisdiction, tax liens could be filed at either the state filing office (e.g. Secretary of State) or a local filing office (County Recorder, Register of Deeds etc.) where the taxpayer resides. Work with your searcher to determine where tax liens are filed in your search jurisdiction and order your search accordingly. In those states where tax liens could be filed at either the state or county, remember that an exhaustive search would include a search of both the state and county filing offices.
Check back next week for Part Three: Reviewing Tax Lien Search Results!