Utility Waiver of Lien Privilege

 

What is the Waiver of Lien Privilege?  Most are familiar with the concept that delinquent utilities can become a lien on the property and added to property taxes.  However, state statute and city ordinance provide that if there is a lease situation that the City will waive its right to put a lien on the property IF the proper paperwork and security deposit are filed with the City.  

Deposits are high for this option.  Deposit amount is equal to four (4) times the average monthly bill for the property.  This is established because of the utility schedule timing and when we can start shut-off procedures.  By the time an account is delinquent and subject to shut off, an additional month and a half of service has been incurred.  By the time shuttoff is complete we have 2 3/4 month of service that has not been paid plus past due penalties/interest on any shut-off fees.  Also if a customer is granted an extension under current guidelines there could be another month potentially added to the total.   Now that the City cannot attach this as a lien to the property it must pursue other collection avenues which will result in additional costs.   Thus the 4 month deposit is deemed necessary to protect the City interest and not incur additional fees that would have to be absorbed by other utility users.   The security deposit can be paid by the tenant or the landlord.  If the landlord pays the deposit then it will need to be replenished when there is a switch in tenants.   Note that security deposits are not applied until accounts are closed.   Having a security deposit offers NO protection for shutoff or past dues.  

What is needed to properly execute a Waiver of Lien Privilege:





   
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