When Michael Moiseyev left New York City a few months ago to run Baltimore’s finance department, he became intimately aware of a major pain point in the city’s real estate market — delays with lien sheets.
Those documents, sometimes called lien certificates or lien certs, show whether a property owner owes money to the city.
Moiseyev said he bought a condo in the Inner Harbor, with a nice view and in walking distance to City Hall, but it took a few weeks extra to settle all the paperwork.
That was due to a backlog of lien sheet requests that has been frustrating the city’s real estate industry since last fall when a few key retirements turned a typically two-week turnaround time into a seven-to-eight-week ordeal, according to industry professionals.
“We can see the light at the end of the tunnel,” Moiseyev said. “We are very confident that this one particular issue will be back to normal operations in a few weeks.”
Moiseyev, who became the city’s finance director in October, said his staff already was tackling the issue by the time he started. He said the average turnaround time is falling, but it’s still a hot issue for folks in the city’s real estate industry, like lender Neil Roseman.
Roseman runs Block M Investments and said he has about 150 to 200 active loans, mostly in Baltimore.
“It’s almost like the traffic lights are out and they’ve been out for three months,” Roseman said, noting that the delay hit about eight weeks at one point. “Just complete traffic congestion. … It’s like sitting in a traffic jam.”
Roseman said it’s probably delayed the city from collecting millions of dollars in fees and unpaid bills that typically settle when a property changes hands. Everyone from lenders to investors and homebuyers are affected, he said, and it’s especially affecting title companies.
Thousands of properties are bought and sold in Baltimore every month. Title companies guarantee that owners can legally sell those properties. As part of that process, title companies pay the city of Baltimore to produce lien sheets.
According to David Pierce of King Title in Pikesville, those lien sheets can show unpaid property taxes, water bills, alley paving fees, citations and more.
“There’s very few that are clean,” Pierce said.
For most of his career, Pierce said, the city of Baltimore has taken about two weeks to produce lien sheets with some fluctuation. Currently, he’s seeing delays of five to six weeks. The delays can prevent new homeowners from moving in and add costs to developers and investors, said Pierce, noting that he’s seen deals fall apart because of the delay.
“Properties can’t get settled without this lien certificate,” Pierce said.
Ruth Kohl of Stewart Maryland works with hundreds of title companies every week as an underwriter. Her firm provides insurance to title companies in Maryland.
“Frustration is what we’ve been hearing,” Kohl said of Baltimore’s delays. “Lien sheets are running four to six weeks behind.”
Sometimes, in rare circumstances, a deal can close without a lien sheet, Kohl said, but there’s always a risk of an unpaid bill.
“There could always be some bill out there,” Kohl said. “Title companies do the best they can based on the information available to them. … They search public records. If it’s not public, they can’t search it.”
Moiseyev said Baltimore’s finance department has devoted more staff to processing lien sheets to overcome the retirement and turnover issues that kicked off the delays. He came to Baltimore after more than 15 years working for the government of New York City, which he said also underwent a wave of retirements following the coronavirus pandemic.
The Evening Sun
“The acronyms are different, but the work is very much still the same, both the good and the bad,” Moiseyev said. “Getting financial documents processed is hugely important to us.”
As the city overcomes this lien sheet backlog, Moiseyev said his department will focus on attracting, training and retaining new employees.
“We are starting to very aggressively think what the long term looks like,” he said. “It’s a process. It will take time.”
Deputy Finance Director Yoanna Moisides said one of the next priorities is digitizing more of the department’s processes. While other counties in Maryland send out lien sheets electronically, Baltimore still mails out paper copies of lien sheets, which adds postage and paper costs and takes longer than email.
Moisides said the department is starting to email some documents and is ironing out that process now.
Four months into the job, Moiseyev is bullish on the prospects of his department and Baltimore in general. He said the backlog in lien sheets was exacerbated because Baltimore is seeing more and more real estate sales.
“This story actually has a crust of silver lining. The volume increased. The volume of real estate transactions increasing is fundamentally a good thing for Baltimore,” Moiseyev said. “The city is on the right track.”