Friday, February 19, 2016

Recent Homebuyer Gets Slammed With $18K Bill For Undisclosed Sewer Hook-Up Charge Two Months After Closing; Lien Was Unrecorded At Time Of Sale, But Related Easement Was Recorded & Disclosed On Title Insurance Policy

In Lincoln County, Missouri, KMOV-TV Channel 4 reports:
  • Leonard Bogacki bought his home in Lincoln County in 2014. One of the added attractions of the home was that it was connected to a sewer, as opposed to a septic system.

    Two months after moving in, Bogacki and the other homeowners in his neighborhood got an unexpected bill from Lincoln County Clerk Crystal Hall for $17,905.

    The bill included a warning that if it was not paid a lien could be placed on the property.

    Bogacki is on disability and brings in less than $1,000 a month. He said he can’t afford that kind of a bill on top of a mortgage.

    Hall told News 4 she understands that Bogacki and the other homeowners are in a tight spot. She explained the bill dates back to 2009, when residents of the neighborhood agreed to hook up to city sewers and to the formation a neighborhood improvement district, also known as “NID.”

    Bogacki said he was never told about the bill in any of the usual home disclosure statements.

    “It’s a series of unfortunate circumstances for Mr. Bogacki. The fact that it wasn’t disclosed to him was the main thing I do feel for him,” Hall said.

    When he bought the home, Bogacki did everything he was supposed to. He hired Tom Burkemper’s title company to search for outstanding liens.

    Burkemper said the lien didn’t show up because no liens had been recorded at that time.

    While the lien was not recorded at the time of sale, an easement was, and is listed on the title company’s paperwork.(1) But, there are several other easements listed as well, which is common when homes are bought and sold, and those won’t result in liens.

    Bogacki says he cannot afford to pay the amount.

    “There’s no way,” he said, “I get $916 a month on disability. I’m barely scraping by.”

    When asked who’s responsible, Hall said, “In my opinion the seller or real estate agent should have been the one to disclose that information to him.”

    Bogacki’s agent said there were no red flags, and no indication a bill was coming.

    The selling agent said his client bought the house as a foreclosure and didn’t disclose the NID, because his client didn’t know about the NID.

    As a result, Bogacki can’t sell the house unless he pays up or gets an attorney to fight it.
Source: News 4 Investigates: $17,000 sewer bill.
(1) It appears that the screwed-over homeowner may possibly have a legal against the title insurance underwriter, the agent who conducted the title search, and the attorney who represented him at the closing of sale (if he had one) for missing the unrecorded lien.

While the lien was unrecorded at the time of sale (often referred to as an "off-the-record" lien), the constructive notice created by the properly-recorded easement relating to the neighborhood improvement district ("NID") placed the title insurance agent (and/or the homeowner's attorney) on implied notice (also referred to as "inquiry notice") of the possible existence of outstanding charges for any special assessments in connection with the property improvement for which the NID was created.

That notice, consequently, imposed a duty upon the agent (and/or the homeowner's attorney) to make the further appropriate inquiry that any reasonable person would be expected to make to ascertain whether there were any unpaid special assessments owed to the NID for the improvements related to the sewer connection (ie. the reason why the NID was created in the first place). Had such an inquiry of the NID been made by the title insurance agent (or homeowner's attorney), it would have led to the discovery of the unrecorded lien for the outstanding $17,905 sewer connection charge.

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