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| Vol. 2008-6-a | June, 2008 |
Real Property Purchases - Unpaid Utility Bills
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QUERY: When selling or purchasing property, who is liable for paying
past due water and sewer charges not paid by the previous owner? For instance, what
happens when an investor purchases a property at Sheriff's Sale at foreclosure and the
previous owner had failed to pay certain water and sewer charges? When the investor
chooses to sell he property to a subsequent purchaser, is the Title Company allowed to
withhold funds in order to pay the previous, outstanding water and sewer bills? ANSWER: "No". Ohio law specifically provides: "[U]pon the filing of the entry of confirmation of sale, the title to such land or lots shall be incontestable in the purchaser and shall be free and clear of all liens and encumbrances," except for certain federal tax liens and certain easements. Accordingly, the purchaser of a foreclosed property takes it free and clear of any prior outstanding water and sewer bills and the title company would not be allowed to withhold any funds based upon charges accrued prior to the foreclosure. What happens when the property does not go through foreclosure but is sold and recorded pursuant to a quitclaim deed? When purchasing a property by way of a quitclaim deed, the purchaser accepts the property subject to any liens and encumbrances on the property. Would the purchaser be liable for past due water and sewer bills? The answer is yes if certain prerequisites are met. Ohio law, R.C. 743.04, provides, in pertinent part: "When water rents or charges are not paid when due, the director or other official body may |
(A) Certify them, together with any penalties, to the county auditor. The county
auditor shall place the certified amount on the real property tax list and duplicate
against the property served by the connection if he also receives from the director or
other official or body additional certification that the unpaid rents or charges have
arisen pursuant to a service contract made directly with an owner who occupies the
property served. The amount placed on the tax list and duplicate shall be a lien on the property served from the date placed on the list and duplicate and shall be collected in the same manner as other taxes." With respect to unpaid sewer charges, R.C. 6117.02 provides: "When any rents or charges [for sewers, sewage treatment or disposal works] are not paid when due, the board shall certify the same together with any penalties to the county auditor, who shall place them upon the real property tax list and duplicate against the property served by such connection. Such rents and charges shall be a lien on such property from the date the same are placed upon the real property tax list and duplicate by the auditor and shall be collected in the same manner as other taxes. Accordingly, if the above cited procedures are met, the unpaid water and sewer charges become a lien on the property and a subsequent purchaser of the property by quitclaim deed would take the property subject to the water and sewer charge liens. Of course, prudent purchasers can protect themselves be requiring a warranty deed, title search, and title insurance, with the advice of an experienced Attorney. AUTHOR / EDITOR: J. NORMAN STARK is an Attorney-at-Law, a Registered Architect, (AIA, NCARB) Registered Landscape Architect, Interior Designer, Planner and Senior Appraiser (ASA), admitted to practice law before the Bar of Ohio, the US District Courts, Ohio and Illinois (Central Dist.), the US Court of Appeals, and the United States Supreme Court. He is a Mediator, Arbitrator and Litigator with experience in Business, Construction, and Public Works, and with additional experience in Real Estate, Construction-Legal Project and Crisis Management, and as an Expert Witness. His office is in Cleveland, Ohio. |