Many property owners in Pennsylvania are aware that municipalities have the power to file a lien against property for the amount of unpaid real estate taxes. Property owners, however, are not always aware that municipalities also have the right to file liens for unpaid water and gas charges and that these liens take priority over all other liens, except tax liens. The existence of such a lien can complicate the process of selling a parcel that is subject to a municipal lien.
Under the Municipal Claims and Tax Liens Act (“MCTLA”), the city has the power to file a lien for unpaid gas and water bills. This lien takes priority over all other liens, including mortgage liens, and must be satisfied before the owner can deliver good title to a buyer. Once the lien is recorded in the office of the local prothonotary, the land owner can challenge the lien by asking the municipality to issue a writ of scire facias if the municipality has not already done so. The writ gives the property owner the opportunity to challenge the amount of the writ and to raise any procedural deficiencies that may have occurred in the issuance or recording of the writ.
This procedure can cause problems for landlords. Commercial leases (and some residential leases) contain clauses requiring tenants to pay for gas and water used on the premises. If the lease requires the tenant to make payment directly to the municipality, and if the tenant fails to make one or more payments, the property may become subject to a municipal lien without the owner’s knowledge. In a recent case, the landlord did not learn about the liens until several years after they had been recorded.
Any property owner who has received notice of a municipal lien or a writ of scire facias may wish to consult an attorney who specializes in real estate law. Such a consultation can help lay out possible defenses to the lien, including payment, lack of notice or other procedural deficiencies. A knowledgeable real estate attorney can provide useful advice on whether and how to challenge such a lien.
Source: The Legal Intelligencer, “Commonwealth Court Refuses to Extinguish Municipal Liens,” Alan Nochumson, June 30, 2015