Dead man's 8-year-old water bill comes back to haunt new property owner, with interest

Robert Haslett is on the hook for another man's water.

This March, the city sent him a letter stating that it was transferring $499.79 of charges to his account for a property he owns in Ottawa's Hintonburg neighbourhood. The balance was for four months of water arrears, "plus accrued interest to date."

Those arrears date back to 2017, just before he bought the property, and the city didn't get around to telling him until now.

"We were never even afforded the opportunity to pay the original bill or to contest it at that time," Haslett said. "It's accrued in secrecy, with no detail, no accountability."

Unlike most other utilities, unpaid water charges attach to the property, not the individual. They transfer to the new owner after a sale. But it isn't quite so simple. The city told Haslett that it must take steps to locate and collect from the previous owner before charging the arrears to the new one.

In an email to Haslett, deputy city treasurer Joseph Muhuni said that can be "a lengthy and complex process," sometimes hampered by missing contact information or "non-responsiveness."

In this case, any non-responsiveness has a simple explanation. The previous property owner died six years ago. Their 2019 obituary is accessible online. 

Haslett said it took him 30 seconds to find it, and his lawyer confirmed that the man was, in fact, deceased.

"How it took them a further six years to determine that the owner had passed away is quite shocking," he said.

Interest charges remain a mystery

Haslett has been trying to pry a key detail out of the city. He's wondering how much of that $499.79 charge is made up of interest and late charges that piled up over those eight years, and how much is for the previous owner's actual water usage.

So far, the city won't tell him.

Muhuni explained that privacy legislation prevents the city from sharing details about the previous owner's account. The city advised Haslett to file a freedom of information request, a process that costs money and can take months to complete.

The closest thing Haslett got to an answer is the city's formula for calculating interest. Once the account closes, interest charges accrue at a daily rate of 0.0417 per cent, applied every 15 days following the due date.

Mathematically, arrears of roughly $150 compounded twice per month at that interest rate would accumulate about $350 of interest over eight years, for a total of $500.

In a response to CBC, Muhuni said the city is working with Haslett to ensure he receives information about the property, "such as interest and penalties."

Haslett said that's news to him.

"They declined to provide any sort of information to us," he said. "They declined to provide an invoice or a bill or a summary or any sort of details on the stated amount and simply said that it's their right to do so and if we didn't pay it would go on our property taxes."

'It's the principle of the matter'

Rita Asangarani, an Ottawa lawyer who specializes in real estate, wills and estates, said it isn't especially uncommon for new property owners to get hit by outstanding water arrears.

But an eight-year delay is unusual.

"That is very uncommon. We find these things out within days, weeks, months, maybe a year or so, but eight years is new," Asangarani said. "That's not something I've come across before."

The city did not answer CBC's questions about why it took eight years to inform Haslett of the charge or why it wasn't able to determine that the previous owner was dead.

Muhuni told CBC that lawyers typically request water and tax certificates to identify outstanding charges. He advised Haslett to contact his lawyer to deal with the charge through title insurance.

Asangarani agreed that title insurance is probably the easiest way to deal with the problem.

"If it were my client I would say, 'OK, let's talk to your title insurance'," she said. "Normally, those things would be covered."

But she said the certificates aren't a catch-all and recent water bills can fall through the cracks.

"They will generally show what has been charged and what's in current arrears," she said. "Water bills are charged every two months, and so if they haven't been billed, especially for the final reading, they're not going to show up on that tax or water certificate."

Haslett doesn't think it's fair to ask him to rely on title insurance for what he views as the city's "incompetence" in dragging the matter out over eight years. He said the city should cancel the whole bill. He might have paid the original charge, since fighting it wouldn't be worth the effort, but the interest is another question entirely.

He said he is now considering taking legal action.

"I will spend far more than this bill is worth, but it's the principle of the matter," Haslett said. "And I imagine there's many other people in the same situation that don't have the means or the resources to fight this."