WATER-SEWER HOOK UP FEES- MARYLAND

I reviewed a title today and found that the property was subject to a water-sewer hook up fee payable annually. I have seen these a few times lately and want to bring to the attention of realtors and buyers the fact that these fees run with the land and are a lien on the property.

The documents relating to these fees are usually filed by the developer at the time that they are setting up the subdivision.  In short they impose an annual fee, payable by the record owner of the property, for re-paying the cost of establishing public water and sewer lines. These fees are usually paid to a private company.

You will likely not see these documents in a title report on a property whose development has been in place for 20 or more years, but if the development is newer than that, the may be subject to these fees.   In all cases where we have seen these fees we have been transferring the property out of foreclosure to a new owner. If we are researching title on behalf of the buyer we immediately provide a copy of the water-sewer hook up agreement to the buyer (prior to closing) and advise them that the property is subject to the annual fee.

As a matter of practice when we write a policy of title insurance on properties subject to these fees, if it is transferring out of foreclosure, we generally "take exception" to these water-sewer hook up fees, meaning that if the servicing entity claims that they are owed past due fees the title policy will not insure against these fees.  Why do we except to these matters?    There are few reasons for this title exception, some of which are:

1. The foreclosure attorney will not have done a full 60 year title search and will likely not have found these documents.
2. As a result of the fact that the foreclosure attorney did not find the documents relating to water/sewer hook up fees, the servicing entity would not have been notified of the foreclosure.
3. Because these fees "run with the land" there may be past due fees that are owed by the seller, (in the case of foreclosure, the Bank)
4. We have no way of knowing to whom the fees might be due.

It would be a different story if we were transferring the property from owner A to buyer B, because the current owner would know to whom these monies were due, but in the case of foreclosure, although we can easily find the documents, we have had difficulty finding the correct entity to enable us to get the necessary payment information. The recorded documents usually have the name and number of a servicing entity but often times we have been unable to locate these companies.  They have either gone out of business, merged with another or sold the servicing rights to yet another company.

If you are the listing agent on a property that lies within a newer development please take a few moments to inquire (ask the neighbors) about water/sewer hook up fees just as you would ask about HOA and Condo fees.  By taking a few moments of your time to try to find this information you will be able to disclose this additional fee to the potential buyer thus eliminating the "surprise" receipt of an annual bill that can run between $300.00 and $500.00 annually.