Water Watch NYC

Everything you need to know about water in NYC.

Stand-Alone Liens vs. Tax Liens

5 Comments

DEP Commissioner Emily Lloyd has said that her department’s ability to sell stand-alone liens against the property of delinquent customers has been its “single most effective enforcement tool” (quoted in a New York Times article dated October 7, 2007 by Anthony DePalma). About a year and a half ago the DEP lost its ability to sell stand-alone liens and it was replaced by the right to sell tax liens.

So what’s the difference between these two types of liens, tax and stand-alone?

In the interest of being as explanatory as possible, let’s first define the word lien as it appears by itself. Wikipedia defines a lien as “a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation.”

In our case this means that if the DEP secures a lien on a property of which the water bill has gone unpaid, the DEP has the right to sell that property and use that collected money as payment for the water bill.

In essence, the scenario described above is a stand-alone water lien, where the DEP has the ability to sell a lien against a property for the sole purpose of collecting on a water bill.

A tax lien is when an entity has the right to sell a property for the purpose of collecting unpaid taxes.

How does this relate to the DEP, as the DEP bills for water usage and not taxes?

Currently, with its ability to sell tax liens and not stand-alone liens, the DEP can only sell a lien against a property if that property is also delinquent on taxes. The DEP claims that this makes their current lien selling ability an ineffective tool for collecting unpaid bills, as only about 15% of their unpaid bills come from properties that are also delinquent taxpayers. This leaves the DEP in a situation where they have no lien sale rights on about 85% of their unpaid bills.

Author: Hershel

Hershel is a Water Management Engineer with Ashokan Water Services, where he's actively involved with conservation and building design issues. Prior to his Ashokan, he was with the City of New York. He is a former President of the New York chapter of the American Society of Plumbing Engineers (ASPE) and is a member of AWWA, NYARM and BOMA. Hershel is an avid kayaker.

5 thoughts on “Stand-Alone Liens vs. Tax Liens

  1. Why does DEP collect these bills in the first place? If the owner does not pay the bills, why not turn them over to Dept. of Finance for collection, and collect it on the next tax bill, or impose a tax lien as a result?
    (Why have two agencies collecting money from property owners, and imposing property liens, when one already does it and does it well.)

  2. Be wary of contacting the IRS about tax liens when they show up on your credit file. You can inadvertently wake a sleeping giant that will wreak havoc on your financial life. Get professional help. It’s worth the investment.

  3. Second mortgage or home equetiis do show, when recorded and this is the issue. I used to work for a title company for a major lender and issues do arise. Some lenders send the home equity to be recorded themselves, lenders don’t know all the variables that go into a recording, they miscaculate fees, don’t know about cover pages, maybe there’s a dual tax id and it costs more, some states only accept single sided mortgages. Maybe the county rejects the mortgage as the font is too small, the notary stamp bled through the paper, or there is no stamp or seal at all. If it’s rejected, the county sends it back to the lender, who most times thinks the mortgage is recorded until the borrower goes to refinance and the he is not on record so it takes them 6-8 weeks to go to their vault where they hold everything to either figure out the mortgage was not recorded or they don’t have it at all.I don’t know why people like home equetiis, for some it’s a status thing ..I have a 500k home equity ..some need money quick and dont understand the full economic process and think home equetiis are a good deal because the rate is low. Like any other mortgage product, home equetiis have their usefullness, but it’s not for everyone or every situation

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