In some areas, the utility company is a part of local government. What this means is, if one of the bills for that property goes unpaid, you could be subject to penalties not unlike forgetting to pay your taxes. In areas where things like water and sewer are provided as a part of the city government, if your tenant doesn’t pay: you could be the one in trouble. In some cases, an unpaid utility bill on a property can cause trouble for the next tenant when they attempt to get them in their name. Staying on top of these rental bills can save a lot of time and energy in the future.
A utility lien isn’t really a true lien in the first place. The only way they can really be enforced is in shutting off the water service to that property. Though statutes may vary, other utility liens- those for gas, sewer, and garbage can also be problematic.
For some utility companies, the answer is as simple as keeping the landlord or owner on the utility bills. This is a good idea if you want to be sure that the bill is getting paid, but it also carries with it the risk of you potentially owing an unpaid balance if the tenant skips out. However, it can protect you from getting a lien on your property, so, it’s best to weigh those pros and cons. Of course, careful tenant screening can go a long way towards preventing this sort of issue, as well. Finding a tenant who isn’t likely to stick you with the rental bills can help.
This can also be a problem when you’re buying distressed properties or even sometimes those that aren’t. Because most of these legislative acts are provided so that cities can still collect any charges when a property is sold, if the property you’re buying happens to have a lien on it: guess who is usually on the hook for that owed amount? In some states, it may be the seller, but in others, it’s the buyer, so, check with your local laws to be sure. In most cases, if someone living on a property, or the property owner hasn’t paid the bill in about 3-4 months, they shut it off. This may also apply to sewer and gas, as well. This is to prevent a huge debt being accrued for which the new property owner may have to take care of.