REAL ESTATE LAWLETTERS

REAL ESTATE LAW, DEVELOPMENTS AND
TECHNOLOGY FOR EXECUTIVE DECISION MAKERS

J. NORMAN STARK, ATTORNEY-AT-LAW

JURIS DOCTOR, B. ARCHITECTURE, B.F.A

Vol. 2000-9 September, 2000

UNPAID UTILITIES; WHO PAYS?

Upon purchase or sale of real property, the issue of liability arises for past due water and sewer charges, not paid by the previous occupant or owner.

Query: Where the previous owner or occupant failed to pay water and sewer charges, is a Sheriff's sale purchaser of foreclosed real property, liable for such charges? And, upon sale to a subsequent purchaser, is the escrow agent permitted to withhold funds to satisfy the outstanding utility 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. See: Treasurer of Hamilton County v. O'Toole, (Feb. 24, 1988), Hamilton App. No. C-870245, unreported, 1988 WL 22665 at *2 ("The law [R.C. 5721.19] reflects the legislature's desire to provide to the buyer a title that is not clouded by the sheriff's sale or any past liens except federal tax liens").

Accordingly, the purchaser of a foreclosed property takes it free and clear of any prior outstanding utility charges for water and sewer and the title company may not lawfully withhold any funds based upon such charges accrued prior to the foreclosure.

When property is not sold through foreclosure proceedings but is conveyed by a Quitclaim deed, the purchaser accepts the property subject to any liens and encumbrances on the property. Here, the purchaser may be liable for past due water and sewer bills, but only 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."

As 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." (Emphasis supplied.)

Where these required procedures are met, the unpaid water and sewer charges become a lien on the property and a subsequent purchaser, by Quitclaim deed, would take (title to) the property subject to the delinquent utility charges as a lien.

Prudent investors and purchasers retain experienced legal counsel, using the tools of title search and insurance, to protect their property rights and interests, before purchase.


*  *  *


Author:  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 has had experience in business, Construction, Real Property, Litigation and Construction-Legal Project and Crisis Management.

 


A Licensed Professional Association

17000 St. Clair Avenue
Cleveland, Ohio 44110-2535
Tel: (216) 531-5310
Fax: (888) 833-5860

Email: NormStark@aol.com


 

home | consulting | public speaking | law letters | selected publications | background | contact
J. Norman Stark, Attorney. All rights reserved. 2004