Ohio residents who fail to pay their water or sewer bills may have their service terminated or have a lien placed on their homes for the amounts due. Twice a year, in September and March, Cleveland Water has the ability to place liens for outstanding debt with the county where water service is provided. While there does not appear to be any statutory minimum amount of arrears required for this process to be initiated, Cleveland Water has informed local advocates that it requires the customer to have at least $300 in arrears over a six-month period and requires the customer to be disconnected from service. If the homeowner pays the amount due, the lien is immediately released.
In Ohio, the county treasurer can initiate a foreclosure action against a homeowner when taxes or charges like water and sewer debt are overdue. If the court enters a foreclosure judgment, the home is sold at auction to satisfy the debt. Prior to the sale, notice must be published in a newspaper once a week for three weeks. The winning bid at the auction receives a deed to the home. The homeowner may redeem their home prior to the court confirming the sale by paying the overdue amounts, assessments, penalties, interest, fees, and court costs.
Alternatively, the county treasurer can sell a lien on a home at auction. Notice must be provided to the homeowner by certified mail at least 30 days before the sale and be published in a newspaper. At the auction, the lien certificate is awarded to the bidder with the lowest rate of interest on the debt. Following the sale, the purchaser becomes the owner of the lien.
Following the lien sale, the homeowner has one year to redeem the property by paying the owed debt, as well as up to 18 percent interest, attorneys’ fees, and other penalties. If the homeowner fails to redeem the property during this period, the lien purchaser can file a lawsuit to foreclose on the property. Once the foreclosure is finalized, the homeowner loses ownership of the home. However, after the lien purchaser is compensated for the original lien amount, interest, attorneys’ fees, and other charges and penalties, any excess funds from the sale of the home must be transferred to the original owner, provided the owner knows to request such funds. After three years, any unclaimed funds revert to the county.
Cleveland and Cuyahoga County have seen a significant shift in the enforcement of liens through foreclosure over the past five years. According to publicly-available data from the Cuyahoga County Court system, there were 1,559 tax foreclosure cases filed in 2014. Of these, 574 (37 percent) were filed by the county directly, and 985 (63 percent) were filed by private lien purchasers. By contrast, in 2018, there were 2,210 tax foreclosure cases filed. Of these, 2,034 (92 percent) were filed by the county, and only 176 (8 percent) were filed by private lien purchasers.