Holy cow, there’s some horrible advice in this thread. You would think there’s a scud missle parked in that property illegally. This is such an easy issue to address it’s not funny. Get a quote to have a service upgrade done and the necessary repairs to bring it up to code, assumimg it isn’t currently. Adjust your offer accordingly, assuming you still want the property. After you close, you put the service in your name. End of story, move on with life, and enjoy your new home. It is absolute nonsense that you assume any liabilty for a property you did not nor do not currently own. Your responsibility starts when you sign.
I don't think anyone is saying you are liable if you never own it, but the second you do own it, it is POSSIBLE to be responsible for a previous owners issues. I've seen it. I've seen a title company miss it. Sure, title insurance may help clear it up. All I'm saying is assuming that you are liability free because the last owner did it, not you, may not be correct. Maybe it is correct. Depends.
Example from the city of Minneapolis regarding water service (many other examples can be found, this is just one. I've seen things like this missed by everyone before closing) :
What is a Service Address Lien?
This is the unpaid amount owing from previous bill payer(s) at this service address. This amount remains with the service address property according to state statutes and city ordinances. The City may assess this amount to property taxes.
Why does the water bill stay with the property when the property is sold?
In Minneapolis, as well as with many cities across the nation, unpaid amounts owed by a previous bill payer at a service address (a lien balance) remain with the property, and the new owner of that property is responsible for those charges. This is in accordance with state and city laws.
When you sell a property the realtor, buyer, or seller contacts Treasury Operations. The city reads the meter and sends a final bill to the occupant. The previous owner pays the bill or it is negotiated at the closing. The title insurance company involved with the sale might also be contacted as they sometimes check with utilities to make sure no outstanding debts are attached to the property. If there is a dispute, the new owner may be able to take legal action against the previous owner for non-payment. In most cases, this can be done through conciliation court.
The new owner is ultimately responsible for resolving the situation. Water service will not be turned off because of the former owner's outstanding debt. However, service can be discontinued if you fail to pay charges that you incur. If you cannot pay the full delinquent balance, an installment agreement may be set up.
If you can't negotiate a satisfactory installment agreement, the lien balance from the previous owner may be added to your property taxes.