Old Atlanta water lien

31 Replies

Ok, I'm throwing this out more as an interesting situation to show the unexpected stuff that can happen. Since most are in different states, with different laws, this may be completely different for you than for me.  But if anyone has had this happen, please let me know how you handled:

- Am selling a property that I bought in 2009. I did get title insurance. 

- Closing attorney informs me that water dept has a $ 2400 lien from previous owner on it. 

- I contact title company, who investigates. 

- They just turned down the claim, because this lien was only filed in 2014, 5 years after I bought the property. 

- The lien is in the name of ZJ, who owned it for 1 month in 2000 and it changed hands 10 times between his and my ownership. 

I'm in contact with the city attorney, because there's also a Georgia law where a water provider can not put a lien on a property, if the property wasn't in the hands of the owner at the time the charge was occured......Since I owned it in 2014, then I shouldn't have to be responsible for a water bill of a previous owner, if they forgot for 14 years to file this lien.....

Wish me luck

Look into statute of limitations when it comes to utilities - which seems to (sometimes) follow contract law.

I’ve been reading up on it as I have a water bill issue from before I bought the house.

It sounds like it’s four years... but probably varies by state.

@Michaela G. Good luck!

Statute of limitation in georgia on judgment liens is 7 years. I've been arguing with the city attorney on this, who's trying to tell me that that doesn't apply to water liens. It always did in the past.

@Michaela G. I’d also reach out to your PUblic Utilities Commission (PUC). From what I’ve been reading, if this was electric or gas, they’d have a say and you could bring the case before their review board. But many areas’ water departments don’t fall under PUC control.

It sort of sounds like it’s the Wild West and most of the billing laws are very gray when it comes to water.

Current water lien law may not be relevant since you bought before 36-60-17 was amended to include that limitation.

What does local law say about lien duration for water? 

Folks, This is ATLANTA, you can't assume that you're dealing with reasonable public servants that abide by laws.  They make it up as they go.  

@Michaela G. Good luck and let us know what happens.

   

@Bob B. She didn't mention where the property was.

From what I understand water liens are indefinite pursuant to Atlanta city code. They're like real estate taxes. This is not surprising as that's how water is dealt with in every state we cover.

But yes, this should be fought... based upon the facts presented, seems unfair for lien to be recorded years later.

It's also possible information regarding this bill was available but overlooked due to its age.

Updated 9 months ago

Ooops sorry Bob, now I see Atlanta in the title of the thread.

Originally posted by @Tom Gimer :

Current water lien law may not be relevant since you bought before 36-60-17 was amended to include that limitation.

What does local law say about lien duration for water? 

The water charge was from 2000, I bought property in 2009, 36-60-17 is from 2010 , lien was placed in 2014. Subsequently, they placed the lien after 36-60-17 was in place, which states that a water provider can not place a lien on a property unless the owner was the one incurring the charges.

Have googled left to right and can't find statute of limitations for water liens, but in the past they were always dropped after 7 years, as I've bought several properties with old outstanding water liens (houses were torn down years before and they were now vacant lots) and demolition and water liens were dropped due to +7 years. 

@Tom Gimer , actually, even property taxes are only collectible for 7 years here. 

I used to wholesale vacant lots here and this neighborhood many of the houses were torn down in the 1990's by the city. Taxes were low and the tax buyers typically didn't buy those fifas because they knew that owners had abandoned those houses and they'd just be sitting on those fifas. 

I've bought many of those and taxes beyond 7 years were dropped, same with water and demolition liens. 

@Tom Gimer The title is "Old Atlanta water lien", so I guessed the property is in Atlanta 

You were right to bring it to the title insurance company. My advice: find a kick (rear) real estate lawyer to investigate whether (s)he'd take it up as a case AGAINST THE TITLE CO for you. Here are my reasons/the facts that bring me to this conclusion: You purchased a property. you purchased a TITLE insurance policy. (owner's policy, yes? please confirm. this is important). the policy indicates that you are free and clear from " encumbrances and liens" that are in existence on or previous to the date that you took possession of the property. therefore, somebody missed it. Namely, somebody who is the agent for that title insurance company. as you said, every place is a little bit different. The laws vary, the requisite due diligence varies, Etc. If your area has public services that traditionally are in a position to put a lien on a property, then it seems to me that this due diligence should have been performed. On the other hand, if it's some private water company with no real public ties whatsoever and nobody ever searched their records for bits and pieces, then I could be dead off here. I'm also not saying you should spend you all your capital on litigation. However, the insurance company and or its agents are required to find this stuff for you. get someone qualified to make a phone call to them.

@Steve McGovern , yes, owner's title policy. 

Then there would also be something about the original closing attorney E & O insurance, except that that attorney filed bankruptcy, due to one of their partners embezzling funds.......

I might try to find out who now has the files - bankruptcy trustee - and whether they have access to those closing files and see whether there's a water lien query in the file, which was answered with 'no outstanding water bills' from the water company

@Michaela G. Google "georgia lien for water" and on page 1 you'll find a spreadsheet from 2009 from a title education firm in Georgia (now Dixieland Title Assoc) that says water liens are indefinite per local ordinance. 

@Bob B. I addressed that oversight yesterday at the bottom of the post you replied to.

Originally posted by @Steve McGovern :
You were right to bring it to the title insurance company.

My advice: find a kick (rear) real estate lawyer to investigate whether (s)he'd take it up as a case AGAINST THE TITLE CO for you. Here are my reasons/the facts that bring me to this conclusion:

You purchased a property.

you purchased a TITLE insurance policy. (owner's policy, yes? please confirm. this is important).

the policy indicates that you are free and clear from " encumbrances and liens" that are in existence on or previous to the date that you took possession of the property. therefore, somebody missed it. Namely, somebody who is the agent for that title insurance company.

as you said, every place is a little bit different. The laws vary, the requisite due diligence varies, Etc. If your area has public services that traditionally are in a position to put a lien on a property, then it seems to me that this due diligence should have been performed. On the other hand, if it's some private water company with no real public ties whatsoever and nobody ever searched their records for bits and pieces, then I could be dead off here.

I'm also not saying you should spend you all your capital on litigation. However, the insurance company and or its agents are required to find this stuff for you. get someone qualified to make a phone call to them.

OP said the water lien wasn't recorded when she took title. Title insurance doesn't cover future matters unless you purchase affirmative coverage for same either through enhanced title insurance or endorsement.

I just found something interesting: In 2010, when they proposed amendments to 36-60-17 to make things clearer, this is one of the requirements, which would make a water lien sort of like a mechanic's lien, in that they'd have to file suit within 12 months or lose it......I'm going to dig some into that. 

" (7) A claim of lien provided for under this Code Section 36-60-17(d), shall lapse and be of no further effect one year after the filing of the claim of lien if an action is not commenced pursuant to subsection (1)(vi) hereof on or before that date which is the one year anniversary of the recording of the claim of lien. Failure of a lien claimant to commence a lien action to collect the amount of the claim within said time renders the claim of lien unenforceable. A claim of lien may be disregarded if no notice of commencement of lien action was filed within 30 days from the anniversary of the date the claim of lien was filed."

https://www.gabar.org/committeesprogramssections/programs/leg/upload/Winter-10-ACL-Proposal-Real-Property-Section-Utility-Liens.pdf

Originally posted by @Tom Gimer :
Originally posted by @Steve McGovern:
You were right to bring it to the title insurance company.

My advice: find a kick (rear) real estate lawyer to investigate whether (s)he'd take it up as a case AGAINST THE TITLE CO for you. Here are my reasons/the facts that bring me to this conclusion:

You purchased a property.

you purchased a TITLE insurance policy. (owner's policy, yes? please confirm. this is important).

the policy indicates that you are free and clear from " encumbrances and liens" that are in existence on or previous to the date that you took possession of the property. therefore, somebody missed it. Namely, somebody who is the agent for that title insurance company.

as you said, every place is a little bit different. The laws vary, the requisite due diligence varies, Etc. If your area has public services that traditionally are in a position to put a lien on a property, then it seems to me that this due diligence should have been performed. On the other hand, if it's some private water company with no real public ties whatsoever and nobody ever searched their records for bits and pieces, then I could be dead off here.

I'm also not saying you should spend you all your capital on litigation. However, the insurance company and or its agents are required to find this stuff for you. get someone qualified to make a phone call to them.

OP said the water lien wasn't recorded when she took title. Title insurance doesn't cover future matters unless you purchase affirmative coverage for same either through enhanced title insurance or endorsement.

According to the city attorney, a title examiner is required to ask for water liens in writing, regardless of there being a lien or not. So, I would again say that title insurance should have responsibility. So, even though the closing attorney may have screwed up, if that attorney/title examiner worked on behalf of the title company, wouldn't it then still be in the title company's court?

(with there being 10 change of hands between 2000 and 2009, I can't imagine that every title examiner screwed up.) 

@Tom Gimer Tom, I deeply respect your work-- I ran a Title insurance agency myself for a brief stretch. The point I'm making however is the one about the requisite level of due diligence that's necessary to underwrite that policy. Just for arguments sake, would you write a policy without having researched the TITLE at the RoD/Clerk's office? answer is, "of course not." If another provider did exactly that... would you call him liable? Also of course.

@Tom Gimer sorry- New phone, New operating system... still adjusting to Android. double space doesn't even capitalize on my phone! Gotta be a setting for that.

ok... so the next question is would the liability under those circumstances run to the title co? My answer is: doesn't matter-- they'll seek to avoid the conflict and I bet for $2500... they'd pay.

now the real question in the OP's case is "is a search of water department's records USUAL AND CUSTOMARY prior to title policy writing and closing on her jurisdiction? SHOULD they have known?" It most assuredly is in my jurisdiction.

Furthermore and almost more importantly, any lender reviewing a Lender's policy after this would be pretty ticked off to see that a conveyancer hasn't taken full steps to assure a first lien position. This would knock him/her right off that Lender's list-- and fast!.

The responsibility lies with the guy writing the policy, who should be the same guy performing the DD.

Originally posted by @Michaela G. :
Originally posted by @Tom Gimer:
According to the city attorney, a title examiner is required to ask for water liens in writing, regardless of there being a lien or not. So, I would again say that title insurance should have responsibility. So, even though the closing attorney may have screwed up, if that attorney/title examiner worked on behalf of the title company, wouldn't it then still be in the title company's court?

(with there being 10 change of hands between 2000 and 2009, I can't imagine that every title examiner screwed up.) 

 ...ok, so if this  true, this cinches it:  the Agent SHOULD have known, even if (s)he did not.  The Agent is Liable;  The Policy should pay, and then extract justice upon the Agent.  

Michaela,  this says nothing about the Agent proclaiming BK, of course.  Get a good lawyer, and compel the Policy to pay.  That's what you paid for, after all.   

@Michaela G. Give the exact history please. Either the water lien was recorded or not. An unrecorded "lien" is not a lien regardless of what someone in the government tells you.

I suggested a few posts ago that the bill (not lien) in question may have been so old that is was off the radar of everyone involved with this property for years.  But until it was recorded as a lien -- capable of being foreclosed and affecting other interests in the subject property -- it may not have become a title issue. 

@Steve McGovern For sure errors can be made in the title process that a title insurance policy will not cover. And yes, those errors can turn into liabilities for the title company to deal with separately from the title insurer. In this scenario with the title company out of business and perhaps not purchasing tail coverage, that complicates things a lot. That means that OP could have a claim that nobody will satisfy. And while I understand the "nobody wants to litigate over $2500" argument, that's not the point. If it were, the first thing everybody should do is read their contracts to make sure they aren't going to be paying their opponent's legal bills if they lose... because they add up quickly when demand letters are sent.

But based on what I've heard so far, I believe this goes back to what public record was at the time of OP's purchase. If there was no lien recorded, how can title -- or OP for that matter -- be responsible for missing it or paying it? Why should water be permitted to record and enforce a lien against OP's property today for water bills (not liens) from 2000?

If you read the legislative history, one of the points of the current law passed in 2010 or so was making what water is trying to do to OP today impossible. Unfortunately it seems she's dealing with an issue from 2009 or earlier. 

Push hard enough and it disappears... but I doubt it's falling on title/insurer unless some other facts surface.

@Michaela G. I'm not a lawyer so take this for what it's worth.  I agree with everyone that said you may have a good claim with the title insurer.  And I understand why you can't go back on the closing attorney (because I can guess who you were dealing with).  The one thing I'd add is maybe you have a claim against the seller?  After all, they presumably promised in the deed to warrant and defend your title forever.  Notwithstanding @Tom Gimer comments, my understanding of Georgia law is that governments can claim liens even if they are unrecorded.  So it's possible the lien against the property existed in 2000 even if it wasn't recorded until 2014.  

Honestly, I'd be surprised if the city attorney wanted to break his pick on this one.  Feels like a weak position for them.  Maybe they're just waiting to see if you pay them off without a fight? 

Depends on what title was transferred to the buyer.

General warranty deed usually warranties for full chain of title. Limited warranty or special warranty deed says for the time I owned it I warranty it.

Quit claim is whatever interest someone has in the property they give it to you. 

So specific warranties and the duration of those warranties IF ANY a seller is given should be spelled out in the contract.

I dealt with an over 100k water lien on a large apartment in Atlanta in Fulton county many years back. Had to get the mayor, city attorney, and the water department on a conference call. Took many weeks to get the schedule lined up. They agreed to settle the lien for less owed.

I have no clue what the water department there does now. I know the water and sewer rates in Fulton county are horrible. Some of the highest charges in the country even with no water leaks. The sewer systems in the streets in some areas are over 100 years old and falling apart.

Things might have changed but used to Fulton county had a law on the books where a water lien WAS NOT discharged through a foreclosure.

A 2k water lien the costs per hour by an attorney could easily eclipse that. You might have to find an attorney for pro-bono and only collect if they win or you could go on sites like rocket lawyer where you can post question for nomimal fee and get answers.

No legal advice given.           

Small claims court is what I'd do, if this doesn't get cleared up by closing wednesday.

The seller was a large bank, so coming after them would be pretty impossible.

Part of me also wonders what exactly this lien is.

The guy owned it for 1 month in 2000. Big leak? Maybe. But an even number of 2400? No pennies? I've never had a water bill that wasn't uneven.

And since it changed hands 10 times between that guy and myself.....how come nobody else came across it, when the standard is that closing attorneys have to fax for water payoff? 

Reach out to the local news, let them take care of it for you. They'll get a feel good story that's interesting and you'll get someone to likely research this and get it fixed for free....

Or what about trying to settle it and work it down to something worth your time? Ask the make up of the fees/charges etc see if you can't get it to a point where it's worth it just to pay it vs fighting it.

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