Many people don’t realize that water/sewer service is attached to a property address rather than a person. If there are unpaid gas or electric bills after transfer of ownership, the previous owner is still responsible. But if there are unpaid water/sewer bills, the new owner is ultimately responsible because it is tied to the address, not the owner.
What happens in a traditional home sale is a final water meter reading is requested shortly before closing. Prior to closing the title company checks to make sure there are no outstanding water bills, and at closing the seller gives the closer their new address to send the final water bill. The seller usually pays the final bill when it arrives and all is well. If the seller doesn’t pay it (rarely happens) the final amount due (usually a small amount) is added to the new owner’s bill because it is tied to the property address.
I’ve had a couple foreclosure/short sale closings this week and the process is a little different there, which is what made me think of this post.
Typically there are delinquent water bills in a foreclosure/short sale situation, and there may also be a special assessment added to taxes for prior unpaid bills. (My closings this week both had special assessments around $800 PLUS about another $800 in unpaid bills…and about $250 held for the final water bill.)
Your title company should take care of all this as part of closing, but be sure to look for unpaid water bills, special assessments and funds held for payment of the final water bill as part of the seller’s closing expenses. If they aren’t paid, you will be paying them in the future!
I had the same experiance recently with a owner finance property I sold. I have heard it is not that uncomon with lease/options either. Thank You Troy