Pretend you’re lying in bed after a long, hard day at work, and you’re just getting comfortable when you realize you left the front door unlocked. Do you get up and lock it or fall asleep?

Probably nothing would happen, you say to yourself. After all, when was the last time someone tried to break into your house? What are the chances of a burglar deciding to rob your house on the very night you decide to leave your door open — especially when there’s never been an attempt before?

It’s a convincing argument, but most of us end up getting out of bed and locking the door anyways. Why? Because it’s the smart and responsible thing to do. It’s a relatively effortless risk mitigation technique. Better safe than sorry.

It’s the same story with a UCC Search to Reflect; it’s a critical piece of the due diligence process and the smart and responsible thing for a secured party to do. Here’s why.

True Due Diligence is a UCC Search to Reflect

After a UCC-1 filing or amendment, secured parties should perform a UCC search to reflect, which is a UCC debtor search of the office where the UCC document was filed after the filing posts to the index.

It’s a double-check — more for peace of mind than anything else — but it can save a secured party’s priority position by revealing whether or not the filing office committed any typographical errors. Financing statement errors, such as to the debtor’s name, can cause your filing to be lost in the public record and can put a secured party at risk.

A UCC search to reflect will also reveal whether or not another creditor filed another UCC, or one of the many other types of liens, against the debtor.

A Better Way to Close with BNN Services

Since 2008, BNN Services has been trusted by title agencies, mortgage lenders, servicers, and consumers to perform loan and document signings in multiple languages across the country. Unlike other signing services, BNN Services “touches” each and every file 8 or 9 times to ensure the process moves forward free of delays. That’s why we’ve completed over 250,000 signings in all 51 jurisdictions and maintained a closing ratio of 96 percent.

There are many different types of liens, and we know them all. Liens are a creation of the legislature designed to allow certain ways to secure debts on real estate.

Here’s a brief introduction.

What is a lien?

A creditor may place a notice on your property requiring you to pay off your debt before you can sell the property and transfer title to the buyer. Liens are usually placed on real estate, but can also be attached to other personal property.

Judgment Liens

A judgment lien can be placed on your real estate or other property when a creditor files a lawsuit against you and wins the court judgment. Judgment liens vary from state-to-state. 

Other Types of Liens

Creditors can also place a lien on your property without suing you in a variety of different ways.

Property Tax Liens

Regardless of when it was placed, a property tax lien takes precedent over other mortgages or liens on your property. Because the government can sell your property to cover your unpaid taxes, lenders will pay the taxes themselves to protect the mortgage and add it to your debt. You might, however, be able to pay the back taxes and get your property back once “sold.” Procedures vary by state.

IRS Liens

If you receive notice from the IRS and still fail to pay your taxes, it can place a lien on your property, especially if they cannot garnish your wages due to unemployed or sporadic employment. The IRS tends to act swiftly and can force a sale of your home if you owe a significant amount.

Mechanic’s Liens

If you hire a contractor and don’t compensate him or her within one to six months, the contractor can place a lien on your property. The contractor can also sue you to enforce the lien within one month to six years, and potentially force the sale of your property. Procedures vary by state.

Child Support Liens

A recipient of alimony or child support from you may put a lien on your property until you pay what you owe, sell or refinance your real estate, or the recipient forces a lien sale. 

Family Law Real Property Lien

In some states, such as California, a spouse may file a lien against his or her community real estate interests to pay attorney fees in a marital action.

Meet BNN Services

Now that you know the different types of liens, it’s time to learn how to protect yourself and your clients from other unnecessary risks. BNN Services has been clarifying risk for its clients for over a decade. Visit our homepage to learn more!

If you’re purchasing a brand new house, you’re probably wondering why you need title insurance on a newly constructed home. Title insurance is about protecting yourself from the debts, obligations, and errors to the title that the previous owners of your home may have incurred, but no one has owned your home yet besides you. So what gives? 

The answer is simple: title insurance also protects you from other losses your developer may have incurred. They might have committed fraud or have complicated inheritance issues, which puts your home in jeopardy. Plus, there was a previous owner of the land your home is on. 

Previous Owners of the Land

Who were the previous owners of the land you’re building a home on? Did they have liens against their land, or are their heirs in dispute about the land? Even if this is previously undeveloped land, whoever owned it could have failed to pay their taxes, taken out a lien on it, or died and left a dispute about the land. 

Through the process of securing title insurance, you can discover potential complications like these. The policy will cover the court costs if you need to resolve these issues in court. 

Developer & Clerical Errors 

Owners aren’t the only ones who can incur unresolved debts. If your developer gets into a dispute with a contractor, perhaps by failing to pay them, the contractor can put a lien on the property. No matter how responsible you think your developers are, even a subcontractor of their contractors can place a lien if they are not paid. That can put your title in jeopardy. 

Though you can discover these potential liens, sometimes the clerk will make an error and fail to disclose a lien or other complication on your property. If so, title insurance can also offer you protection from this error. 

Remember, your policy will protect you as long as you have an interest in this property. So, even if an error isn’t discovered until you build the home or move in, you’re still protected by your title insurance. 

Promote Trust 

Ultimately, you want to trust that your developer did everything right, such as purchasing land that doesn’t have any liens and paying all of the contractors involved in their work. Title insurance helps promote trust in the real estate industry. It allows everyone to move forward with their work and purchases even if there may be an error because we all know that we’re protected. That trust is critical.

A Better Way to Close with BNN Services

Since 2008, BNN Services has been trusted by title agencies, mortgage lenders, servicers, and consumers to perform loan and document signings in multiple languages across the country. Unlike other signing services, BNN Services “touches” each and every file 8 or 9 times to ensure the process moves forward free of delays. That’s why we’ve completed over 250,000 signings in all 51 jurisdictions and maintained a closing ratio of 96 percent.