Guidant Financial Group Blog

While many investors are familiar with the sale of tax liens as a means for counties to get paid on past-due property taxes, it may come as a surprise that liens can be purchased on unpaid water and utility bills.

According to recent reports by the Associated Press and the Baltimore Sun (see Deadline Looms on City Bills), Baltimore, Maryland’s tax sale next month will include liens on unpaid utility bills.

The surprising part of this story, however, is that lien holders can foreclose on a home for an unpaid utility bill of as little as $130. In fact, according to the Sun, more than half of the liens up for sale next month are on bills with a balance of less than $500.

Not surprisingly, many Baltimore residents are in an uproar over the possibility that people’s homes could be taken from them for such a nominal debt. (Baltimore is already among the top cities affected by the sub-prime mortgage crisis.) While a potentially phenomenal investment for outside investors, what is the moral implication behind such a transaction?

The sale has yet to happen, so there may be a change in plans – but that is yet to be seen.