Welcome to the new Lien Solutions blog – insights and resources to help professionals reduce risk and shape the future of their business. You’ll find articles on thought leadership, practical tips, and an exchange of ideas that drive innovation and better outcomes.
What is the importance of searching for other lien types? In general, a four-part search should be part of any thorough due diligence investigation, and is critical to the “discovery” process. Can you imagine going to a closing having conducted only a UCC search, only to find after the closing that a tax lien was on the property just acquired?
So, you’ve done your initial due diligence and approved a client for a revolving line of credit secured by assets such as inventory or accounts receivables. You file a UCC and begin extending loans, and everything seems to be going smoothly, until you get wind of the infamous “f” word…federal tax lien, filed on your client!
We have discussed why you should care about staying alerted to federal tax liens, and we mentioned the 45-day time limit lenders are faced with in the unlucky (but somewhat likely) instance of the IRS placing a federal tax lien on one of your clients. You’ve probably heard of the 45-day rule before—but how well do you understand it? Let’s look at an example scenario.
Information culled from online databases is inexpensive, but you get what you pay for. It’s not current. In fact, it often lags months behind real-time data. By the time you find evidence of a lien filing, you have likely already issued credit that will be second in priority to the IRS.