When Should I Terminate My Utilities?

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My home has been foreclosed. When should I terminate the utilities?

We have vacated our home and the mortgage company has just posted a foreclosure sign on the property and a Do Not Trespass on the door. At what point...

We have vacated our home and the mortgage company has just posted a foreclosure sign on the property and a Do Not Trespass on the door. At what point should we terminate the utilities?

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Once the lender or mortgage servicer takes possession of the property, the borrower has no dominion or control of the property. Does this mean the moment the borrower walks out of the property the last time is the exact instant when the lender assumes all liabilities for the property?

The law is not always black and white. This question is gray, and different courts answer liability questions differently. If the borrower is expelled from the property, or if the borrower quits the property and gives a clear, unambiguous notice that he or she surrendered the property, then there is a strong argument that the lender assumes all liabilities for the property, including utilities and taxes. On the other hand, if the property is still titled in the borrower's name, then there is an argument the borrower has liability because he or she is the owner of record.

How your state answers this question is an exercise for each borrower. Your safest course of action is to consult with a lawyer in your state who has experience in real estate law. If you cannot afford a lawyer, call your county bar association and ask for the name of the organization that provides no-cost (called pro bono) legal services to people in your area who have low or no income. Make an appointment with that organization, and bring all of the documents relating to the loans and title for the property to your meeting. The lawyer you meet will research your question and advise you accordingly.

It is safe to discontinue the fire insurance and utilities the moment your property is sold. However, at what point in time between when you vacate the property and the moment of sale when you can cease your utilities and fire insurance is a question that must be answered on a state-by-state basis.

When you learn at which point you can discontinue the utilities and insurance, contact your utility company and insurer and inform them of the situation. Tell them the home has been foreclosed and the bank now possesses the property. The utility company will need to make arrangements with the bank if they need to have access to the property.

To learn more about foreclosure please visit Foreclosure Advice and Assistance from Bills.com.

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  • KT
    Minneapolis, MN,
    Jun, 2011
    If I no longer occupy the home and the Sherrif's Sale is in a month, is that the point I should cancel the utilities? thanks!
    • BA
      Jun, 2011
      This is a difficult question to answer because each state legislature or court system answers it differently. Consult with a lawyer in your state who has real estate experience to learn the correct answer your particular set of facts.
  • BN
    Champlin, MN,
    May, 2011
    What if you are planning on staying in the home during the redemption period? We want to save all we can. Do we need to be paying the utility bills if we want access to water, heat and electricity?
    • BA
      May, 2011
      I think you answered your own question. Or, put another way, who will pay for your utilities if you, the resident of the property, do not?