ULC

Why States Should Adopt UFLRA

This Act is a successor to the Revised Federal Tax Lien Registration Act of 1966. It allows all federal or real estate liens to be filed for record in the clerk and recorder's office of the county in which the real property subject to the liens is situated.

Without an act like UFLRA, federal law requires filing of federal liens in the office of the appropriate federal district court. This means that liens affecting land title do not appear in the normal title record, increasing exposure to defective title on the part of subsequent purchasers and holders of land, higher costs for title insurance, or exclusion of the risks of liens from the terms of title insurance. The risks and costs of landownership rise, unnecessarily, as a result.

The recent passage of federal legislation establishing a federal environmental lien makes the problem particularly acute. Amendments to "Superfund" establish lien authority for the federal Environmental Protection Agency. Like the federal tax statutes, Superfund provides that liens be recorded in local land records unless state law fails to provide for the recording of such liens. These liens are then filed with the clerk of the U.S. district court where the land is located. There are other federal liens which apply as well, such as the Pension Reform Act.

Enactment of this Act benefits all buyers and sellers of land. The existence of a federal encumbrance affecting a parcel of land is crucial information for real estate lenders, as well. The local land records should reflect significant interests in real property which may be purchased or offered as security for indebtedness. Federal liens should be filed in the local land records.