Undisclosed Sewage Treatment Capacity Charge

[Ana Marie B.]

Hi BP Family!  I'm writing to get some insight from any landlords who may have experienced a similar situation as myself.  About 1 year ago, my husband and I bought a rental property (single family home) from a flipper.  We rented out the house and all was well.  Recently, we received a past-due Sewage Treatment Capacity Charge for the rental, mailed to our primary home, totaling ~$500 (includes late fees, etc.).  The statement threatened a lien if left unpaid. The total sewage charge will cost ~$9,000, payable in 15 years on a quarterly basis. 

I immediately did 3 things:  1.) I phoned the Sewage Dept to obtain some history/background and explained that this is the first time we're ever hearing about such a bill; 2.) I emailed our realtor and sent him a screenshot of the bill and asked how the Title co. didn't catch this; 3.) I paid the ~$500 bill in order to avoid any further penalties.  

What I learned from these calls is that the "former, former" owner (the owner before the flipper who sold us the house) in fact signed a document agreeing to the sewage capacity charge.  However, the flipper (last owner before us), bought this property at auction and never made any payments toward the sewage charge.  Our realtor also consulted with the Title co. and came up empty-handed.

My reason for writing this is two-fold:  1.) I want to warn other investors to be mindful of such a charge and perhaps ask their realtor to be as thorough as possible to help ensure these charges are brought to light before the transaction ends; and 2.) see whether any other landlords have any clever ideas for possible courses of action we can take aside from what we've already done.  

Obviously, we'll have to raise the rent on the tenants come renewal....Anyway, thanks for reading!

[Tom Gimer]

Check your owners title insurance policy for specific exceptions — this agreement should be listed if it runs with the land. 

Sometimes the terms of these agreements are expressly included (or at least referenced) in the deed as well.