$20k Water Bill Balance on Rental I am Selling - Who is Liable?

Question

Getting ready to sell a rental when I saw the most recent water bill balance was $20,000. Turns out, the (month to month) tenant was out 5 months ago before a pipe burst and the city turned it off. During this time my PM was pursuing an eviction, but had to get a certificate of occupancy to register with the city first. Finally, got a search warrant to do the inspection and realized the tenant had been gone since December 2022. I only have communication from the PM indication the tenant was in the house to their knowledge. Any advice on how to remedy this? Who could be liable? Oh, forget to mention there is also foundation damage. Any advice welcome. Thank!

Nathan Gesner · Answer

Find a new PM. In case you misunderstood, I'm suggesting you find a new PM. Now.

When a Tenant is not paying rent and the property manager is actively pursuing eviction, someone should check on the property regularly to determine if the Tenant is still living there or if they have abandoned. Your PM has no communication with the Tenant, no rent, and they don't even check on the property to see if he's still living there?

In my office, I suggest checking on the property once every 1-2 weeks, depending on the situation.

In your case, someone went to the house, found the door locked, and then didn't go back for five months!!!! Did they even bother to look in the windows?

The law requires a Landlord to give notice of entry; it does not require Landlord to get permission. Your PM should have posted notice on the door stating they would be back to inspect the property in 24, 48, or even 72 hours. They then go back with keys and/or a locksmith. If they are afraid of a violent confrontation, then they can call the police for an escort. If they had taken this simple step, they would have discovered the property abandoned in December. They could have turned the property around and rented to a paying Tenant in less than a month. You would have earned five or more months of rent income, saved the $20,000 water bill, and saved the cost of whatever damages you are now forced to repair.

I'm going to make a bold statement and say that your PM made an amateurish mistake that cost you tens of thousands of dollars.

Scott Mac · Answer

A search warrant -- to do a home inspection (???)

Nicole Heasley Beitenman · Answer

You would think. According to the water company, there isn't. We filed complaints with the attorney general and CFPB. We'll see what they have to say.

Nathan Gesner · Answer

I doubt you'll find a leak. It's probably a toilet flap stuck open that allowed water to run continuously for five months. The City won't pay a dime for that.

Bjorn Ahlblad · Answer

At this point you own the bill. I would try to negotiate with the Utility to reduce the amount. In the future, walk by the door with someone and you hear water running, or a baby crying and do 'emergency wellness' inspection. Get a new PM. All the best!

Dan H. · Answer

I strongly agree with what @Nathan Gesner stated, but also your lease should spell out the inspection criteria that is permitted by the law (1 day notice, 3 day notice, can enter for emergency reasons, etc).  This way the tenant has signed the lease and is aware of the inspection criteria.

If I am not getting rent, I will be inspecting the unit with the required notice regularly.  I would know very quick that the tenant had vacated the unit.

>The account just says 'OCCUPANT'.

I am unsure if this is your problem.  The tenant is the occupant if they have not provided notice until the time that you recognize, and the law recognizes, that they are not the occupant.  How is this your problem?  My tenants typically have the utilities in their name.  Our tenants are responsible for the utility bills.  I assume you were never the occupant.

Good luck

Andrew Syrios · Answer

This sounds like negligence on the part of the PM. Also the water company should have been sending you the bills or the PM the bills if the water was transferred to your name. If not, it would be on the tenant still. I would think you have a case and should talk to an attorney

Theresa Harris · Answer

Surely there is a time limit if that $500 has NEVER appeared on any bill since 2019 and was apparently from 2011.

Theresa Harris · Answer

Did the PM not do an inspection when the tenant stopped paying the rent?  Did they contact the tenant and, if so what if any was the response?  The tenant can not refuse to let the PM enter the unit in most places provided proper notice is given.

Zachary Brown · Answer

@Nathan Gesner you are exactly right. At the stage I am at now, the house is empty and I am pursuing an off market sale. My predicament now is the utility bill. I have two points of attack here. First, have the city inspector come out and check for leaks. If there is no evidence of the leak, then more leverage to fight the water charge. If there is a leak or a main line breakage we can see if the city is liable for some. Either way, I will be negotiating the bill. Meanwhile, I am prepping documents to discuss with a real estate attorney. We will potentially go after property management for gross negligence. most feedback I have gotten is that the PM are generally protected from this, so I am really hoping my negotiations with the city will go well.

$20k Water Bill Balance on Rental I am Selling - Who is Liable?

Most Popular Reply