Can I turn off the utilities on my name if tenant wouldn’t take them over?

Question

Hello everyone, I always come to this forum to look for information but I have never posted anything, but today I have a question that I can’t get answer for, I am hoping to get some advices here-

I have a rental property in Raytown, Missouri. The leasing requires tenants to take over the utilities before they move in. As a landlord, I have the auto revert to keep the utilities on for the convenience of remodeling between tenants. Somehow a tenant was able to move in without transferring over the utilities, and he wouldn’t transfer the utilities over even if the property management company has contacted him multiple times, he also won’t pay for the utility bills we billed back. In this situation, would it be ok if I turn off the utilities on my name? If I do so, will I put myself into trouble because I made the apartment inhibitive ? I am just hoping by turning off the utilities will force them to take it over.

And what if this tenant is a section 8 tenant, would it be helpful if I report to HUD that he is violating the leasing rule ( not taking over& paying utilities), will it cause him to lose the voucher? Or if the HUD will go ahead issue him more money to cover the utilities?

Another thought is, what if I always schedule to turn off the utilities on the day tenants schedule to move in? This might force future tenants to take it more seriously about starting utilities on their own names…..

Any insights would be highly appreciated !

A small remote landlord

Kevin Sobilo · Answer

@Shin Ma, I'm not sure how section 8 may affect my approach but this is how I would handle it. First, my lease state which utilities the tenant is responsible for. So, if they happened I bill it back to the tenant. My lease also states that any fees, bills, etc are payable "AS RENT". So, if unpaid they are delinquent on rent and I just evict them for unpaid rent. So, it becomes a simple cookie cutter eviction. Once that was being handled, I would discuss compensation from the property manager. They failed in their duty to confirm utilities had been transferred into the tenant's name prior to turning the property over to them. Their "error" cost you money. In most states property managers are licensed real estate brokers/agents and they carry "errors and omissions insurance" for these kinds of liabilities caused by their mistakes. So, I would ask them to pay something or make a claim against their insurance. If handled right away, the amount is probably not large enough to bother suing them over but that would also be an option. This isn't something that happened just because the tenant did something wrong. It happened because of the property managers mistake/negligence.

Nathan Gesner · Answer

1. The fact that you are asking this question of strangers indicates your property manager is an amateur. They should have a policy in place to prevent this from happening. They should have a policy for handling it when it does. They should be leading the charge and giving you the answers instead of leaving you to ask for advice from strangers in the interwebs.2. The policy should be that Tenant does not receive keys until they have met all the requirements. This includes paying the deposit and rent, showing proof of utilities, proof of renter's insurance, and whatever else the lease requires. No show, no go.3. The lease should state that Tenant shall "maintain" utilities at all times. They can't revert the utility back to the owner. They can't allow their payments to lapse. They can't willingly turn the utility off to save money. If they fail to maintain, terminate their lease.You have to be careful. If you turn off the utilities, it could be construed as a self-help eviction, which is illegal. I've done it before by giving the Tenant a written notice that the utility will be shut off on a particular date and they must set up their own accounts. If you make it clear that this is not an eviction action, then you may get away with it.Personally, I would make the PM demand the Tenant pay everything owed and establish accounts within five business days or face termination. If Tenant fails, the PM should evict.I would also consider looking for a professional property manager instead of the glorified rent collector you currently have.

Theresa Harris · Answer

Why did the PM give him the keys if the utilities weren't in his name? Call his caseworker and let them know there is a problem. Second, if the utilities are not in his name and that is listed in the lease; then he's in violation of the lease and needs to be given notice. Your PM should also know that and be handling it.He's at risk of losing his section 8 if he's not following the terms of the lease.

Shin Ma · Answer

Thank you Kevin, I believe the lease states like what you said- the charge back utility is as the rent. Now since the tenant is not paying back to utilities, he is violating the lease. Property manager said next step is to threaten evict him which seem to be the obvious choice, but my concern is just another round of turnover cost, long period time of waiting for new tenant.

Shin Ma · Answer

Thank you for the helpful infomation everyone. The property management company has always been handling this well until the recent two tenants. I also had a hard time finding good quality tenants due to the location of the property in the city. I have spent more money than I liked to get someone who pay in the past 2 years. That’s probabaly we jumped on them too quickly. After reading everyone’s response, I just sent email to property manager to for more actions to be taken regarding this, including telling tenant they will be evicted if not transferring/paying by a certain date. I will see how it goes,,,, worst case I will have to evict the tenant, pay for more turnover cost and have the place unoccupied for another long period of time… ( which I am trying to avoid)

Jaron Walling · Answer

Agree with @Nathan Gesner. What the heck is the PM doing about the situation?? That’s what investors pay them for. Utility bills can stack pretty quick if the tenant is bad with heating/AC or take long showers.

Michael Smythe · Answer

Given the tenant challenges, you may want to disable the auto-transfer.

Theresa Harris · Answer

Have you thought about selling the property and buying one in a better area? If the local market is hot, now is a good time to sell a less desirable property.

Richard F. · Answer

Aloha,A lot depends on what local law and/or the Util companies require. However, my first question would be, why are YOU dealing with the utilities at all? The PM should have handled establishing/stopping interim service between Tenants. It may be you mishandled the changeover, depending on how, exactly, the utility operates. For example, here, we have "leave on" agreements that some Owners place to avoid the minor administrative fee the Util charges for switching, RATHER than simply requesting "interim service" which has the fee. The difference is, the "leave on" is just that, if no one applies...it is left on in Owner name. The interim service starts and stops on instruction from PM to Util co only.Also, whose Rental Agreement is it? Yours or the PM's? If it is the PM's, then it would seem the error is on them, and they need to collect from Tenant or pay out of pocket. If the Tenant is ultimately disregarding the terms they agree to (including whatever the HAP contract states regarding utils), then they might be held responsible, or, the casework might remove them from the program, in which case your guaranteed rent just flew out the window.Local law or Utility policy will determine whether you can, or cannot turn off the utils in your name now.