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
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
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
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."
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.