Why is it important to run civil litigation searches?
Civil litigation searches reveal civil suits, or civil cases, that may involve the person or entity that you are investigating in conjunction with pre-funding due diligence. These are non-criminal cases that have potentially infringed on the rights of another person or entity.
Typically, the main objective is for the plaintiff to seek monetary compensation. There are many different types of civil cases, but the three more common are Tort Claims cases, Breach of Contract cases, and Landlord/Tenant issues. It is important to review these types of cases when working on financial contracts to ensure that it is a low risk relationship.
There are multiple jurisdictions in which to run civil searches. Where you choose to search is based on how thorough you need your due diligence. A basic search would be at the main or primary state court. Every state handles their court structure a bit differently, including calling the courts different names, such as Superior Court, County Court, or District court as a few examples. Some states have more than one court that is needed to be searched for proper due diligence. A search at this level would reveal any pending or closed cases that may result or, did in fact, result in an adverse judgment.
There is also the federal level, or U.S. District Court. There are hundreds of districts within the U.S. District court, so it’s best to focus the search into the appropriate division. The federal courts oversee civil cases that involve federal level statutes, law, regulations, constitutional rights, etc. If a federal question arises during case proceedings of a state court case, then it may be transferred to the federal level as well.
By searching for pending litigation it can alert you to a potential judgment that might be filed against your borrower, which could in turn affect ability to stay current with loan contracts. Searches like this can also be run on people that handle money or secure financial information, CPA’s, Business owners, banking staff, to ensure that not only are the borrowers free of risk, but associates or even internal employees are as well.
Performing a litigation search helps uncover another part of the puzzle, alerting you to any potential red flags prior to doing business with the borrower. It provides necessary and important information on what else is needed before closing the deal.
Need information for a legal matter in a timely manner? We conduct a 10-year Pending litigation search on the name or names provided in the jurisdiction requested. Reach out for more information.
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