Could there be a potential property lien due to unpaid bills from the previous owner's renters?

Question

I am purchasing my first home from a seller who never lived in it, only rented. If the renters had an outstanding balance with the electric or utility company, would they be able to place a lien on the property and delay my closing? My real estate agent mentioned this but it doesn't make sense that a third party's outstanding debt would effect my purchase of the property.

Answer 1

No, I have not heard of any case where a utility bill was treated as a mechanic's lien (a lien put on the property by someone who has made improvements to the property). Unpaid utility bills are a personal obligation, not something that will attach to the property.

Answer 2

At settlement, you cannot be forced to pay outstanding gas, electric and telephone bills.

Water and sewer bills are government provided services and government can place a lien on the property which would have to be paid at settlement. The seller would normally pay the discrepancy at settlement but make sure you're not on the hook. If the seller has outstanding water and sewer bills, those will be paid from the proceeds.

I heard a story about a telephone company obtaining a mechanic's lien when they weren't paid for connecting a new house to the telephone network. The title search discovered the lien and the title insurance paid off the lien allowing the property to be sold. The example is a rare one but you pay these people money to make sure that the property can be transferred free and clear.

Answer 3

There may be liens against the property however it can not hold up your closing, at least not in washington. It is title and escrows job to make sure all liens and outstanding balances are cleared up. Title did miss one on a property i bought, however, since they insure the property, they had to pay the utility bill out of their pocket after closing

Answer 4

Actually I just bought a rental property and my agent told me the same thing about the electric and gas bill possibly transferring to me. I was sure he was wrong but I called the utilities to ask.

The utility bill follows the tenant wherever they go. If people walk out on their bill, the utility company just figures they'll get 'em eventually when they try to sign up for electric again.

So definitely no--- the utility companies won't have liens on the place.

On that subject though, ALWAYS buy the title insurance on any property you buy. It's a few hundred bucks, but it means that if there ends up being any issues with the title not being clear, the title company has to fix it for you for free. If you don't get that insurance and an issue surfaces someday, just imagine how much trouble you'd have trying to clear it up.

Good luck!

Answer 5

It depends whose name the electric bills were in. Generally, when a tenant moves out and doesn't pay the electric bill, it goes on their credit rating and they won't be able to get electric hooked up anywhere else until they pay the bill. Ask the seller whose name the electric was in. If they're in his name, he will have to pay those bills prior to selling the home to you, just as he is responsible for paying any unpaid tax bills prior to selling to you. By law, he has to tell you what he owes related to the property. The tenants didn't own the property. You can't put a lien on something somebody doesn't own. And you can call the electric company and tell them you intend to buy the house and want to check and make sure the bills are current. If not, who owes them.

Answer 6

Not utility bills, but let me give you a real-life example. I managed an apt. building and a lien was placed on the property by a carpet company that was hired by a tenant to install carpeting in his unit (we didn't know anything about it). He didn't pay, so the carpet company expected payment from the building owner. It's ridiculous, but it's possible that tenants can get away with having work done and sticking the landlord with the bill even if the landlord did not know about or contract the work.

Answer 7

We purchased our home and the previous owner had work done and did not finish paying the bill, and now the our property has been served with a mechanical lien. Are we responsible for this lien.

Answer 8

maybe
because technically utilities enrich the property by the associated use