Buying or refinancing property is one of the most significant financial commitments most people will ever make. Whether you’re a first-time buyer trying to buy a home, a seasoned investor structuring complex deals, or a lender managing portfolio risk, you already know the importance of due diligence.
Most professionals are familiar with a current owner search—sometimes referred to as an O&E report or current owner title search. These reports provide an overview of the present titleholder, outstanding mortgages, and other encumbrances. They are critical in the early stages of a real estate transaction, especially when mortgage lenders need quick confirmation of ownership before approving a loan amount or setting the loan term. That’s where pairing municipal lien searches and AUL (Activity & Use Limitation) reports comes in.
But here’s the catch: relying only on a current owner search report can leave blind spots. Unrecorded debts, unpaid property tax, code violations, or environmental restrictions may not appear in standard county filings.
By combining these three tools, you get a comprehensive view of what really affects the property—helping buyers, lenders, and attorneys avoid costly surprises that could derail closings or inflate monthly mortgage payments.
At its core, a current owner search examines public records for deeds, mortgages, liens, judgments, and other encumbrances that affect the property’s chain of title. Typically covering the period from the last transfer of ownership to the present, this search reveals:
Because they are faster and more affordable than full historical title searches, ownership and encumbrance reports are popular among investors, lenders, and even homeowners wanting to refinance. A title company or county recorder office can produce these reports, though many real estate professionals rely on specialized abstractors or national providers like AFX Research for consistent coverage across all 50 states.
But even the most accurate property title searches have limitations. They only reveal information that has been properly recorded.
Not all obligations are recorded in county deed records. Cities and municipalities often manage separate databases for code violations, unpaid utility bills, and municipal fines. These debts may not show up in a current owner search report, yet they can become the buyer’s responsibility after closing.
Municipal lien searches uncover:
Mortgage lenders and attorneys increasingly insist on municipal lien checks because ignoring them can lead to unpleasant surprises. Imagine closing on a house, only to discover the city is demanding $10,000 in unpaid water bills. Without a municipal lien search, that liability could land squarely on the new owner.
AUL stands for Activity and Use Limitation. These are deed-recorded restrictions that stem from environmental or regulatory actions. An AUL report examines whether the property is subject to use restrictions tied to contamination, remediation, or long-term land-use controls.
For example:
These restrictions are recorded in public records, but they’re not always flagged in a standard ownership and encumbrance report. An AUL report ensures buyers and lenders understand whether environmental regulations could impact the property’s future use—or even affect its market value and the ability to secure title insurance.
When combined, a current owner title search, municipal lien search, and AUL review create a 360-degree view of potential liabilities. This approach protects every stakeholder in a real estate transaction:
In today’s environment of fluctuating mortgage rates and rising property costs, comprehensive due diligence can also protect your bottom line. Avoiding unexpected liens or restrictions ensures that monthly mortgage payments reflect the actual loan amount and property value—not inflated by post-closing surprises.
Why does this matter now? Because mortgage interest rates and mortgage rates directly shape affordability. With rates climbing compared to the historic lows of recent years, buyers are already stretched thin. Adding unexpected property tax bills, lien obligations, or environmental restrictions could make the difference between affordable housing and financial strain.
For lenders, tighter margins and regulatory oversight mean that collateral risk must be managed more carefully than ever. A current owner search provides a strong start, but without municipal lien and AUL reviews, loans could be collateralized against properties with hidden encumbrances. That’s a risk few institutions are willing to take.
A leading title company will integrate all three searches into their workflow:
By weaving these together, the title company can issue policies that protect buyers, lenders, and investors with greater confidence.
Consider this scenario:
Without these extra layers of research, the buyers would have closed on a property that instantly triggered higher expenses, regulatory limits, and disputes over insurance coverage. By combining searches, the transaction was paused, renegotiated, and ultimately protected everyone involved.
For mortgage lenders, attorneys, and investors, the takeaway is simple:
A current owner search is invaluable, but it’s only one piece of the puzzle. To truly safeguard real estate transactions, combining current owner title searches, municipal lien checks, and AUL reports is the smart move.
This layered approach ensures that what’s uncovered in public records at the county recorder office is supplemented by municipal and environmental checks—giving lenders, buyers, and title companies the confidence to move forward.
In a market defined by shifting mortgage rates, complex financing, and heightened regulatory scrutiny, taking shortcuts is no longer an option. Comprehensive due diligence protects investments, keeps monthly mortgage payments predictable, and ensures every party enters closing fully informed.