I have had the same experience as Joe. Paid lots of them. No pay, no
water. I’ve had some knock-down, drag-out fights over this. The laws
vary, but bottom line here was, even though I cited case law to them,
the local water utility knew it would cost me way more than it was
worth to go to court and try and get a decision in my favor. The best
I’ve ever done was to foam at the mouth a little and make them think I
was crazy enough to go to trial, and got them to turn the water on for
a percentage of the outstanding bill.
Not mentioned here is the fact that in a conventional RE closing with
full escrow on a listed property, usually escrow handles paying
outstanding utilities, unless there is an addendum stating that it will be
handled outside of escrow.
On the other hand, when you are closing your own deals in-house, say
a sub-to or anything else, if you forget to check on outstanding util
bills and/or make it clear in your P&S that the seller is paying them,
you’ll end up paying them, because there is no one to turn to. In many
typical ‘distressed seller’ purchases, when you are just taking the
property off the seller’s hands quickly with little or no cash to them,
and they can’t/won’t/don’t care to pay back bills… do your homework,
figure it into your deal analysis. It’s seldom a deal killer to have to pay
these, but it comes right off of your bottom line.
I closed on a house a couple weeks ago. I have not been able to switch the elect or water over to my name because the util company said there is an outstanding balance on the acct from the previous owner. They won’t even tell me how much it is and won’t talk to me about it. They say it is the title companies responsibility. The title company says it is the responsibility of the previous owner that they do not collect for that. What do I do?
I’m pretty sure the utilities can not refuse you service (maybe the water in some states can). The former owner had a contract with them, not you, and not the property. Utilities can not put a lien on a property for unpaid bills.
Demand service, and then have your lawyer demand service.
Just my opinion, to to be confused with anything that has any merit.
Dutch,
I think I’ll have to disagree with you. This may vary from state to state but, in some states, utilities are lienable items.
To the original poster…this is something that should have been taken care of at closing. I would call your closing agent or attorney and demand that they straighten this out for you. These items are right on the HUD-1 statement.
Well, they may be in that state. Regardless, the title company will have to indemnify, and the seller would have signed an affidavite that there were no unpaid bills. Liens are against people, not property, and only attach to property when they own it.
If it was an unfiled lien, I would guess unless that state has some wierd law (not unheard of) that again, the new owner can not be held reponsible for a previous owner’s bill. If that was the case, virtually every real estate transaction would have a problem.
I would still have my lawyer call the utility and threaten a lawsuit if they don’t get the utilities turned on post-haste.
Re: Previous owner left unpaid util bill - Posted by Joe Kaiser
Posted by Joe Kaiser on June 08, 2006 at 17:51:49:
The lien thing . . .
Have the same issue here in some areas where there may or may not
be a lien, but they ain’t turning no power on until the previous owner’s
bill gets paid, period.
And no, it’s not typically an escrow or title issue (you can pay an extra
fee and they will handle it for you, though).
Believe me, I’ve paid a lot of other people’s utilities in my day.
Joe,
That is exactly what I found. Perhaps because it is in your neck of the woods in Tacoma. I have paid others bills as well. Even though it is a drop in the bucket comparing it to the profits, it still sucks though. Cost of doing business here I guess.