Is A New Homeowner Responsible For Previous Utility Bills?

The finer details of closing on a home can get lost in all the paperwork a new owner has to look through and sign. One aspect of homeownership that gets lost in that shuffle is utility accounts.

Specifically, who is responsible for what utility charges and how can a home buyer avoid getting stuck with bills from a previous account?

After all, if you are buying during the dead of winter or the height of summer heat, your move into your dream house can quickly become a nightmare without water, heating, or air conditioning.

For the average real estate transaction, checking for any utility liens or unpaid bills on a property is simple. The title company performs a title search to show any liens filed against a property in the public record. If they find any, the seller will have to satisfy them before the closing. They will also request a final meter reading prior to closing to see if there are any outstanding balances that have not yet become liens.

The utility balance along with other unrecorded municipal debt and issues is found when a full municipal lien search is ordered by the title company or law firm handling the closing. At closing, the seller gives the settlement agent their new address to send the final water bill. Once they receive the final bill, they usually pay. On the rare occasion that the seller doesn’t pay the small amount left, it’s added to the new owner’s bill.