Silent Liens: The Small Unpaid Bills That Can Send a Baltimore Rental to Tax Sale
For rental property owners, most understand tax sale as a property tax problem. You pay the tax bill, and there’s no risk. But this understanding is incomplete, and owners can get hurt by not understanding it fully.
Baltimore City’s tax sale captures more than property taxes. Small municipal charges add up, and they combine to reach the threshold while the owner is only concerned with the tax bill.
Here’s what you need to know about the risk of unpaid bills so you don’t fall into the trap.
What Counts Toward Tax Sale Eligibility?
In Baltimore City, a wide range of unpaid municipal charges are counted as liens against a property. While there are real property taxes, there are also:
- special benefits assessments
- streetscape charges
- alley and footway paving bills
- minor privilege charges
- clean and board costs
- multi-family dwelling charges
- residential registration fees
- environmental control citations
Environmental control citations are particularly important. They are code enforcement penalties, like a property maintenance citation or an unabated violation.
The problem is that owners often treat these as an administrative frustration, something to sort out later on. But if they remain unpaid, they become liens, and that can count toward tax sale eligibility, just like unpaid taxes.
Lower Threshold for Rentals
We help many owners manage their rental properties, and one major surprise is that there is a lower threshold for rental properties.
In Baltimore City, a property that’s owner-occupied only becomes eligible for tax sale when city liens combined reach $1,000. However, when it comes to rental properties, this figure is only $750.
What About the Water Bill Exemption?
Under Baltimore City law, one of the things it limits the use of tax sale for is unpaid water and sewage charges. The risk is that owners take this as broad protection, but that’s not actually the case.
The protection is real, but it only applies if water is the sole municipal lien. The law allows the city to combine water debt with other outstanding charges.
What this means is that if you have $10 in overdue water and $740 in environmental control citations, this adds up to $750 in combined liens. In this case, the water exemption does not do anything because water is not the only debt.
The safest thing to do is avoid treating the water exemption as a safety net for your investment property. Treat it as an exception, but one that disappears if any other charge is unpaid.
Small Problems Add Up
The issue around liens can be a big problem for landlords, and small problems can become major quite quickly.
A slow supply-line leak means water consumption goes well above normal. The bill goes to the address, but it never reaches the owner. At the same time, a maintenance issue draws a code citation, and this goes unanswered too.
By the time you find out about it, the combined balance has gone over the threshold. Suddenly, the property is on a published list.
Then it gets worse.
Redemption means paying the lien amount as well as interest of about 6% to 18%, depending on the jurisdiction, plus the allowable fees of the certificate holder.
Investment properties have less time to do this. A lien purchaser might move to foreclose the right of redemption. For owner-occupied residential property, this is nine months, but for everything else, it’s just six months.
How to Avoid This as a Property Owner
You can avoid this happening to you, and most of the steps to take are not expensive and easy to do.
- Mailing address of record – If a notice is sent to the property and not the owner, this causes problems. This is the biggest failure point. If you’re living out of state, or have a property held in an LLC, this is important to sort out.
- Water account – Monitor this closely, and not just the tax bill. If you notice spikes in consumption, a sudden jump could mean a leak, so make sure you catch it early.
- Environmental control citations – Resolve these right away. You can contest it, but never ignore one, because that’s how it becomes a lien.
- Rental registration – Registration charges count toward the threshold, and lapsed licensing can affect the right to collect rent in Baltimore City, so keep it current.
- Check the published list every spring – Baltimore City sends a final notice in February, then publishes the eligible list in March, and payment is usually due by April 30. It only takes a few minutes to check whether your properties are on it.
- Build a reserve fund – You can use this to pay municipal charges. A small fund can cover irregular bills, which are easy to overlook because they are not monthly.
How Professional Management Helps
Tax sale exposure mostly comes from administrative drift instead of financial distress – mail goes to the wrong address, there’s a citation that no one opened, a water leak goes unnoticed. Consistent oversight is the easiest way to close the gaps.
At Premier Property Management, we coordinate maintenance to detect problems early. We also keep you informed in our itemized monthly statements, so there are never any surprises.
If you own rental property in Baltimore, and you don’t want the worry of these silent liens, contact us and find out how we can help.
