What is a Water Bill Lien? (And How to Remove It)

You’ve found the perfect real estate investment (by using Propwire's industry-leading search tool). Great!

But, after you dig further into the property, you discover it has a lien. Specifically, a water bill lien.

How did it get there? And what should you do?

Or, maybe you've heard of a water bill lien at a local auction and you're wondering what it means.

In this article, we’ll break down everything you need to know about a water bill lien (including to how to remove one) so you can make the best investing decision now and in the future.

What is a Water Bill Lien?

Simply put, a water bill lien is a legal claim placed on a property by a water company or municipality when the property owner fails to pay their water bills. 

This claim allows the water company to collect the outstanding debt by seizing and selling the property if necessary. 

It is important to note that water bill liens are a serious matter, because they take precedence over other liens and encumbrances on the property, including mortgages.

Results of a Water Bill Lien

A water bill lien can make the property difficult to sell.

When a water bill lien is imposed, it not only affects the current owner of the property but also any potential buyers. After all, a potential buyer (like yourself) may be hesitant to buy the property because of the added fees and the complications that the lien can have during the transaction process.

A water bill lien can affect the market value of the house.

Not only that — having a water bill lien on a property can also negatively impact its market value, making it harder to sell or even refinance.

A water bill lien can cause additional fees.

Property owners should be aware that water bill liens can also result in additional fees and penalties.

For example, let's say the debt remains unpaid for an extended period. In this case, the water company may charge interest or other collection costs.

A water bill lien can increase insurance coverage on a property.

Because some insurance companies view outstanding liens as a risk factor, they can either increase premiums or deny coverage altogether.

How to Resolve Existing Water Bill Liens

If a property already has a water bill lien and you're interested in buying it, require the owner to resolve this before the transaction takes place. If this doesn't happen, and you proceed with the transaction, you may be on the hook for the extra amount, along with delays in the purchase process due to the water bill lien.

How to Prevent Water Bill Liens

Since water bill liens are a serious matter with several ramifications, how can you as an investor and homeowner avoid them with your properties? Moreover, how can you help distressed homeowners you come across who may have water bill liens?

Here's a few tips.

Regular Bill Payment and Monitoring

The most surefire way to prevent water bill liens is to consistently pay all water bills on time. Establish a system to monitor bill due dates and ensure that you never (ever!) miss a payment.

Negotiating with the Water Company

If you are in financial distress, communicate and negotiate with the water company as quickly as possible. Many water companies have programs or options to assist customers in financial hardship. Doing so can prevent a lien in the future.

The Bottom Line: Water Bill Lien

Because a water bill takes precedence over other liens and encumbrances on the property, including mortgages, they're a serious matter, especially if you're a real estate investor interested in a property that has one.

Use this guide to help the distressed homeowners you come across avoid water bill liens altogether or help them resolve it before purchasing a property.

And along the way, ensure you have a payment system set up on your properties so that you don't accidentally miss a few bills and experience a water bill lien yourself.

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