Municipal Sewage Works and Stormwater Liens Can Ensure Fee Collection
Submitted by: Jeff Rowe, Manager

Municipalities continue to face challenges, causing the financial belt to tighten every year.  This financial squeeze makes it even more important to ensure that user fees are collected on a timely and consistent basis.  Filing liens on properties with ongoing delinquency issues is one tool to ensure collection.   Indiana statute establishes the rules and processes for filing liens under IC 36-9-23-31, 32, 33, 34 for municipal sewage works and IC 8-1.5-5-29, 30, 31 for stormwater utilities.

If user fees assessed against the property owner are not paid within the time period fixed by the municipality, a 10% penalty attaches to the delinquent fees under Title 36.  Although no penalty percentage is stated under Title 8 for stormwater utilities, a reasonable penalty may be applied to the delinquent fees.  The delinquent fee, penalty and reasonable attorney fees also may be recovered in a civil action in the name of the municipality.  However, as an alternative, the municipality may choose to file a lien against the real property incurring the delinquent fees.  This lien supersedes all other liens except property tax liens. 

The municipality may file a lien with the county recorder’s office once fees have been due and unpaid for at least 90 days.  A list of liens may be filed as often as necessary in a calendar year. 
The list must include 1) the name of the owner of each real property parcel on which fees are delinquent, 2) a description of the premises and 3) the amount of the delinquent fees and penalties.  The municipality must send a notification to the property owner by certified mail stating that a lien against the property has been recorded.  Within 10 days after the list is recorded with the county recorder, the municipality must certify to the county auditor the list of liens that remain unpaid for collection the following May.  After certification of liens, the municipality may not collect or accept delinquent fees or penalties from owners whose property has been certified.  At the time of each semiannual tax settlement the county will pay all delinquent fees and penalties to the municipality, minus county service charges, recording fees and certification fees.

Although the process of filing liens may not necessarily improve the timeliness of payments, it does ensure the eventual collection of those fees.  If you would like additional information to help assist you with the lien process, please contact us at footnotes@umbaugh.com.