Philly Water company making me pay 6 years worth of bills?

Question

So I'm about to refinance on a house in Philadelphia that has been rented out for the last two months, and that I've owned for almost a year. At closing when I purchased it, the city did a water reading and it was just 30-40 bucks, no big deal.

Fast forward to this past month when the title company started doing their thing for the cashout refinance, and I see that I am going to owe a few hundred dollars at closing! Coincidentally at the beginning of the month, I receive a water bill for over $3,000! Looks like the city realized that something was wrong with the meter for the last 6 years and they are charging me for what would have been the estimated usage.

Needless to say I am beyond frustrated as I had closing scheduled for a Friday, was finally shown the HUD the day before, and immediately postponed the closing.

Property management called the water company and I followed up to put it under dispute. Their turnaround on this review is "up to 30 days". Ouch.

Any recommendations on how to prevent this in the future?

Has this happened to anyone with the Philadelphia City Water?

Ethan Giller · Answer

Do not count on their "up to 30 days", it's likely that they will send you another letter stating: "We were unable to resolve your inquiry within the thirty days (30) as stated. Your account requires additional review and research."

Your best bet is to close the refinance and just put those funds in escrow with the title company, and then work to resolve the issue after closing.

In order to prevent in the future, you need to make sure that your bills show 'actual' for the reading, not 'estimated'.

Ryan D. · Answer

@Mauricio Botero when you originally purchased the property a year ago did you have a title search done? If so, your title insurance policy (if purchased) might cover the back water dues. It's unlikely the policy will pay up but worth a shot. If that doesn't work head over to Philly Water and bring your HUD & results of title search conducted prior to your original closing showing your water dues were zeroed out at the time of purchase. They can at least see your possession date on your HUD and know you did not accrue the 6 years of dues since you've only owned the property for a year. Again, not likely to work but the harder you make it on them, the more likely they are to drop it.

Mike McCarthy · Answer

@Mauricio Botero I actually just went through the exact same thing with them.  Purchased a house, first few water bills were zero since we were doing renos, then I realized (not them) that the past 4 years of water bills were all zero readings.  They of course billed me the $1400 past-due.

It took about 6 months to get an 'informal hearing'.  I went with all my backup, and they said "of course you only owe the water usage since your settlement".  I had to pay the ~$100 of water that I used - and they removed the additional charges.  This was after countless phone calls, their staff saying "the water usage stays with the house through settlement", etc.

Start with the dispute, fill out an informal hearing request, then wait.  They have a backlog (can't imagine why), so it'll take a few months.  But it should all end up in your favor.

It is an awfully run office... good luck - it will be frustrating, I promise that.  :)

PM me if you want more details - happy to share - but don't want to bore everyone here with the gory details.

Jon Sanborn · Answer

One of the most corrupt agencies in the city. They’ll stick anyone with a bill. Definitely fight that. If you have the ability to go there in person, do that. You’ll get answers much faster.

Ethan Giller · Answer

You can definitely just escrow these funds with the title company as part of the refinance transaction and still close the loan, this is fairly common practice, I've done it before myself for similar situations. The title company may require an escrow amount that is 50% greater than the disputed bill, but they should not have a problem with it and still issue a title policy to the lender without an exceptions which is all the lender requires.

Mauricio Botero · Answer

Holy Cow this is a ton of good feedback thanks everyone, kinda relieved in a way (sorry :) ) that I am not the only one who has experienced this.  I'm an out of state investor but I definitely see that going in person has value and in this case I should make the trip.

@Mike McCarthy

For the idea of escrowing from the seller the the amount of the water bill, I'll ask the lender but since I am the "seller" and the buyer in this refi, I'm wondering if that's why they didn't even give me the option. Going to PM you would love to get the gory details, let me know what else I am up against here.

@Ryan D.

I did. After my lender telling me the bad news, my very next call was to that closing office. I asked about the title insurance policy and they told me that since this is happening in the future, it probably wont be covered, but like you said I'm going to reengage and at least take a shot and get put in contact with the title insurance people.

@Karl Schnitzer

First Equity Funding. I can give you my POC there just let me know.

@Ethan Giller

Thanks Ethan I don't think I can in my situation put those funds in escrow. I COULD just have title pay off the existing crazy water bill then keep working to have Philly Water reimburse me, but I also have heard horror stories of getting the city to pay you back on something like that being difficult to near impossible to pull off once you've actually paid them. Definitely going to take a second look at that HUD and what the title company showed in their records from the city.

Karl Schnitzer · Answer

Off topic to your question, but what lender did you use for a cashout refi in Philly?

Mike McCarthy · Answer

Oh, and on another purchase, the title company escrowed $8K from the seller until a similar meter read issue was resolved.  Got talking to the title person and they keep seeing issues like this - and they got burned $12K in an unrelated sale - so they are being extra-careful.

But in terms of your closing, you should be able to escrow that money and get your closing done.  (and then unfortunately wait and wait and wait for it all to be resolved).

Philly Water company making me pay 6 years worth of bills?

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