Who Pays Utilities in a Foreclosure?
When a homeowner faces foreclosure, meeting other financial obligations can become a challenge as well. In some cases, the homeowner can longer afford the utilities and chooses to leave the home. It is always the homeowner's obligation to pay the utilities. Ownership often depends on which stage the home is at in the foreclosure process.
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During a Foreclosure
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While living in the home, the homeowner is responsible for paying all utilities. Utilities will be disconnected if you do not pay. If you are having difficulty paying your utilities, consider contacting your local Department of Human Services or a non-profit organization to apply for utility assistance. The Salvation Army, United Way and American Red Cross are charities with local chapters that often have funds available to provide one-time energy assistance on an emergency basis.
During a Short Sale
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As a homeowner selling the home, you are responsible for paying the utilities during the sale. Although laws do not require you to keep utilities connected, the lender may require you to have the utilities on for property viewings and inspections. Since a short sale is in your best interest when trying to avoid foreclosure, it is best to make showing the home as easy as possible.
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Foreclosure Auctions
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If the home is abandoned before the foreclosure sale, utilities are likely disconnected as well, either by the homeowner or the utility company. When the home is sold in a foreclosure auction, a viewing period is not always offered. Sometimes buyers do not have the opportunity to walk through the property or perform inspections. If there is a viewing period, inspections can be done without utilities, but the inspection report will not be thorough. If you are a serious buyer, consider having the utilities temporarily turned on yourself for the inspection. When buying a foreclosure from an auction, check for utility liens beforehand. If the previous owner had an outstanding balance with the garbage or water company, a lien may be placed on the home to recover the money owed. New owners are responsible for paying any liens.
Bank-Owned Properties
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Bank-owned foreclosed homes are referred to as REO properties. When a home does not sell in an auction or the homeowner transfers ownership back to the bank, the home is listed through a real estate agency. When viewing an REO property, the utilities will likely be connected. However, if the utilities are not on and you place an offer, the listing agent is required to pay for the utilities during the inspection.
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