How to Avoid Hidden Liens: A Guide for First-Time Buyers in Rhode Island

Are you getting ready to buy your first home in Rhode Island? It’s an exciting time, but buying a home is the most complex purchase you’ll ever make. One issue to look out for is the potential for hidden liens.

Liens are legal claims against a property. They can complicate sales and cause problems for buyers. Most liens are easy to find, but others may go undisclosed due to record errors or late filings. Fortunately, there are ways to protect against them.

Protecting Against Hidden Liens When Buying Your First Home

Types of Liens

A property could have a lien against it for the following reasons:

• Tax Liens: Local or state governments might place these liens for taxes the owner failed to pay. These liens are typically easy to discover through public records.
• Mortgage Liens: A lender a mortgage lien on a property when they issue a mortgage for its purchase. Lenders might also place liens for other loans that use a property as collateral.
• Mechanic’s Liens: Contractors, subcontractors, and suppliers might place these liens for work or materials on a property.
• Judgment Liens: A court may impose a lien when a property owner loses a lawsuit and fails to pay the judgment.
• HOA Liens: Homeowners’ associations can file liens if the owner falls behind on dues, fines, or special assessments.

Discovering Hidden Liens

Start your lien search at the local county office covering the property’s location. You would likely find existing tax liens and mortgage liens in these public records. However, hidden liens are, by definition, difficult to find. Maybe the lienholder made a mistake in the filing, or it is under a different name than the current owner. That’s why hiring for a professional title search is important. These professionals have the experience and knowledge to find hidden liens.

Hire a Real Estate Attorney

Hiring a real estate attorney provides additional protection. They can review the title report or perform additional record searches to ensure its thoroughness. A real estate attorney can also help you resolve any liens the title search discovers. They negotiate with lienholders and provide legal advice to navigate these situations.

Get Title Insurance

Even with thorough searches and legal expertise, some liens can remain hidden until after the purchase, making title insurance essential. An owner’s title insurance policy protects the buyer if a hidden lien becomes an issue later. It could pay for a legal defense or settlement to resolve the lien. However, the lender’s title insurance you buy for your mortgage does not cover the buyer. You must purchase a policy for owner’s title insurance to have protection.

Do you want to ensure a thorough title search before buying a home? Click here to contact the First National Title & Escrow team. We offer complete title search services and title insurance to protect buyers from hidden liens. Reach out now to learn more about our services.

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