Is It Possible To Lose Your Home Over An Unpaid Water Bill?

Imagine working decades to pay off your mortgage only to find out your home was sold right out from under you — and all because you hadn't paid a water bill, which you didn't even know you owed. As impossible as this might sound, such nightmares do happen. In many municipalities across the country, a delinquent bill — even for a few hundred dollars — can put your home at risk of being foreclosed.

In the Brooklyn neighborhood of East Flatbush, such a situation has been making headlines. After a homeowner missed a water bill for $600 back in 2019 — right after he paid off the mortgage – the bill swiftly jumped to $5,000, racking up 18% interest a day, before multiplying to $20,000 as fees and penalties from the city piled on. Eventually, a lien was put on the property. The lien was sold to a third party, and eventually, the house was foreclosed and sold at auction. While the city says a notice was delivered, the homeowner says he was never made aware.

On its official NYC 311 website, New York City makes it clear that unpaid bills could result in foreclosure. The website states that overdue water and sewer charges are considered a lien against the property, which the city can sell to a lienholder if the charges are delinquent for more than a year. If the lienholder can't collect what's owed, they can begin the foreclosure process.

With water bills going through the roof, it's not surprising that people have had a hard time keeping up with the payments. In East Flatbush alone, more than half of the properties put into a tax lien sale were due to unpaid water bills,per Eyewitness News. New York City isn't the only municipality with this type of policy in place, however. Cities across Pennsylvania, Illinois, Massachusetts, and Ohio, to name a few, all allow liens to be placed on properties for unpaid water bills. 

Some cities are taking action to prevent these situations from happening. In Baltimore, the Water Taxpayer Protection Act was passed after a lien was put on a church when it was mistakenly charged thousands of dollars in water bills,according to WMAR 2 News. Even though the public works department admitted at a hearing that the bills were incorrect, the charges remained, and the lien was sold to a third party. In this instance, the situation was resolved before the church was foreclosed on, but it underscored the scary reality that failing to pay a water bill — even if you're not at fault — could result in the loss of your property.

There's a push in other cities, including New York City, to make changes. Legislation has been submitted that would improve the notification process of delinquent bills and prevent water bills from being sold to third-party trusts altogether. It remains to be seen whether legislation will pass, but it's clear that the problem needs to be addressed. 

In a statement to Eyewitness News, the New York City Department of Finance detailed its work on the issue: "Our goal is to always help homeowners keep their properties. Last year, we worked with the City Council to implement reforms that give property owners more time, information, and resources to resolve their debts. For this year's lien sale, we strengthened outreach efforts through partnerships with nonprofits, Council Members, and other City agencies. ... We will review the legislation being proposed and look forward to working with our city partners to continue supporting homeowners."

If you're a homeowner having difficulty keeping up with your water bills, consider looking into ways to conserve water in your home. If you're already dealing with delinquent bills, it's important to understand the potential consequences and what your options are. Understand your city's policies, and if your bills are already long overdue, check to see if a lien has been placed by looking at public records or doing a title search. If there is an existing lien, educate yourself about what it means when there's a lien on your house, and speak with an attorney to see what steps you can take to dispute it.