If not handled correctly from day 1, utility payments can quickly become a touchy subject for both tenants and landlords alike.
As long as they are correctly metered, tenants are (unless specified otherwise) responsible for their own utilities. Occasionally we run into a situation where a tenant fails to transfer the utility into their name when they move into the unit.
Picture for a moment that you are a tenant who has just moved into a new apartment. You’ve just paid your landlord first month, last month, and a security deposit, hired and paid the moving company, called your cable company to set up cable and internet and finally settled into your new home… what’s left? Don’t forget about electricity and gas. “Tomorrow” you say… there’s been enough activity for one day. Tomorrow turns into next week, maybe even next month. If you’re a landlord or property manager who is on top of every one of your units, you’ve probably caught onto this oversight and began calling your new tenant to remind them of their obligation early on. Most of the time this is all it takes; one friendly reminder and the issue is resolved. What happens if you don’t catch it? It could be months before anybody realizes the error. By this point, depending on the season, your tenant may have racked up hundreds (maybe thousands) of dollars’ worth of utility bills that they have not been paying. The good news: utility companies can backdate bills to a requested date and you’ll be credited for any overpayment. The bad news: Good luck convincing your tenant to make this happen. They are legally obligated to do so, be firm and keep pushing. When it’s all said and done, they will be fully responsible for whatever charges they’ve accumulated over that period of time.
We recently had a tenant who had been living in an apartment for over a year and never activated one of the utilities in their name. Strangely, the landlord was not receiving the bill either; it is as if this account was just sitting in limbo. In all likelihood, the service provider left the account active as a courtesy given the time of year and the cold weather. It was overlooked by many people for many months and finally… shut off. Tenants call the utility the next day and have service restored and a few weeks later, the bill arrives… Over 1 years’ worth of heating charges in one bill.
The takeaway: this can easily be prevented by both tenants and landlords if correct measures are put into place.
Landlords – Make sure it’s part of your property managers move in process to require that tenants provide proof that they have set up utilities in their name prior to signing a lease. You can also call utility companies in advance to notify them of the tenant moving in and to request a termination services effective on the move in date. They’ll always leave it on for a few extra days as a courtesy and to allow your new tenant time to call for the activation. If you catch the mistake late, do NOT terminate utilities on your tenants after they’ve moved in. This is a violation of a tenant’s right to quiet enjoyment and is illegal (be sure to consult with your attorney for legal advice). Most importantly, monitor your bills! Catch a mistake early and you’ll have a much easier time resolving it.
Tenants – understand your responsibilities and obligations! Ask questions up front to avoid surprises – Do you know how your apartment is heated? Who pays for electricity? Make sure you know in advance what utility companies you have to call and for what services. Utility companies will allow you to call in advance to set up a transfer on a future date, eliminating an unfortunate surprise.
Like many property management situations, a bit of preventative action can help avoid a major headache down the road.
Nothing in this blog is to be taken as legal advice. Always consult with an attorney.