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Updated almost 9 years ago, 01/24/2016
Utilities Swap
I know there are threads about utilities etc already but I am in an interesting situation and looking for some feedback.
I moved out of state and the tenants in my house intend to buy it after leasing for one year.
I am using a rental company and they confirmed while checking the tenants history that their credit was good aside from losing their house during the market crash (which they told me) and that they have never been evicted, and have no other issues with not making payments. Their last landlord vouched for them that they were good tenants who took great care of the house and he had no issues with them, they left because he wanted to renovate his rental so it was a mutual parting.
They moved in OCT 1, so when I got a bill going up to OCT 11th I thought nothing of it, just assumed they had swapped utilities to their name and the cycle just said the 11th to the 11th, and the bill was only a little higher than that of the vacant house bills. However I just went through my bank account and saw that I got charged full utilities costs for this last month. The bills were not insanely high, about $120 total for all the utilities which is about the same I paid when I lived in the house. But its clear the tenants have not moved anything to their name. I did specify that tenants pay utilities.
I would prefer not to evict these tenants. The rental company is supposed to contact them to move things over and perhaps I am being too trusting but I believe they will move them over once they are told to. But am I able to get my money back for the utilities? Its not much, just $120. But the rental company has been... dissapointing so far. In fact I have yet to receive any rental money from the rental company because they didnt deposit as I requested, instead sent me checks without telling me. First check was lost and has not been re-issued. Second check has yet to arrive. Am I just going to have to eat that $120? Can I charge it back to the tenants? The rental company doesnt have an answer for me.
You should have had a clause that stated they were required to transfer utilities in their name and show proof and you verify with the utility company before the lease is allowed to legally start. Also you should have not given keys or accepted payment until this was done. So verify transfer of utilities and that the deposit was paid in cash before move in and first months rent if you require it. This way they can't move in and a check bounces and is no good.
Not paying utility and doing the transfer and not having good funds for down payment and security is a typical tenant scammer move.
Your PM company cannot give legal advice. I can't give legal advice either.
Good luck on getting that 120 back. The problem is that if you now turn off utilities as a landlord you can be seen as a self-help eviction and open yourself up to liability. With the apartments we had to make sure tenants had utilities transferred before move in. This way if they didn't pay the bill the utility was shutting them off and not the landlord. Now a couple of issues is that if they do not pay they might open stove door for heat. They might put a bunch of heaters in and a fire starts. They might burn candles all over and ruin the carpets and burn countertops. Really all kinds of crap they can do rather than come up with the money to keep utilities going. If no heat and it's cold your pipes can freeze and burst.
The problem if you have that utilities revert to you in emergency is that some tenants lie and have actually told the utility company they are moving to a different address and to shut off utility. What happens instead is the utility switches to the landlords name but they do not tell you. 2 months later you get a whopper of a bill to pay while tenants are living on your dime.
Is the PM company you are using even licensed in GA?? On BP we have been hearing of PM companies that are not even allowed to do PM work and not even licensed. The scary thing is the PM company and the tenant could both be scammers. You have to investigate and find out. Calling one landlord back isn't enough as they will give glowing review to get the tenants away from them if they are scammers. You have to go at least 2 landlords back to get the real scoop as they have already gotten rid of the tenants so they can tell you like it is.
The tenants situation might have changed negatively since then which is why you have to look at other factors when deciding to rent to them today or not.
So according to you they owe a pro-rated amount for 11 days in Oct. for 120 correct? Hopefully this is just a simple mix up on their part. They might be in violation of your current lease if they have not transferred utility and showed proof of same.
You might need an attorney if you are getting nowhere with the tenants and the PM quickly.
No legal advice.
- Joel Owens
- Podcast Guest on Show #47
Before you start to panic, have your PM contact the tenant immediately and ask them to switch utilities as outlined in their lease. Also, ask for full reimbursement of the applicable charges. While the nightmare scenarios outlined by @Joel Owens definitely exist (and unfortunately are not rare), chances are that this is just an oversight on the tenant's part. I have had this scenario happen a couple of times too but was able to resolve it just fine. That said, I definitely watch these transitions much more diligently than I did before...
Whitney before you make a request to PM you need to make sure they are actually licensed in GA and are in good standing.
Giving them request means nothing if they are not above board. In that case you would need another PM company to step in or an attorney to clean up the mess.
No legal advice.
- Joel Owens
- Podcast Guest on Show #47
You obviously have some issues with your PM company that need to be resolved. But with regards to the utilities that haven't switched over, is there a reason that you didn't just call the utility company in the first place and schedule a date for the utilities to be transferred out of your name?
Here's what I do. My lease says that tenants are responsible to pay all utilities. So if I sign a lease with a new tenant and hand over the keys on the 1st of the month, I let the tenant know who the local utility companies are and provide them a contact phone number/application to start service with each one. I also let them know that they need to do that immediately (like on the 1st if that's when they got the keys), and that by a certain date (usually the 3rd of the month) I will have the utilities transferred out of my name. (The reason I give them a couple extra days is because I know how stressful moving can be and I don't want to risk them not having electricity while they're in the process of moving.)
Now, if for some reason they don't take the necessary steps to establish utility service in their name before the 3rd, the utilities are still going to be transferred out of my name and shut off. If by chance they forgot to start service, that should be a good reminder. (Though I've never had a problem.)
You won't have the authority to start service in someone else's name, but you should at least be able to stop service in your own name.
The house is in Arizona, I live in Georgia, hence why things are a little bit weird here.The PM is a legitimate company and I selected them personally because they have handled my mother and sisters properties without issue for years. The tenants rental history is clean their last landlord also gave them a good reference. They paid the deposit and have paid their rent perfectly on time so far. I dont know if this was a screw up on the rental companies part or the tenant, I am inclined to believe the rental company because they also screwed up fixing the things found on move in. I gave them my repairman and they were supposed to have him do everything but they had someone else do it. So far they cant provide any reason why they didnt send my repairman when they had his contact info, and why they didnt do direct deposit when I filled out all the paperwork for them to do that. All they will say is "We will contact the tenant."
I am just trying to find out if there is any way I can legally get that money back by charging through rent or something else, or if I am just going to have to suck it up and live with losing the money.I did not have utilities set up to turn off because I cannot turn off the water and electric- I have a pool and pay a company to maintain it weekly, they need water and electric to do that.Which leaves only gas and the gas company in that town has a history of screwing things up and being difficult, which is hard to deal with from across the country, so I just figured I would leave it to help the tenants and me.
We used to provide a utility transfer sheet before the lease start. The tenant would then turn this in with the confirmation numbers before move in, it worked.
Now after going through the process with the gas & electric providers we have the ability to switch the gas & electric into the tenant's name on our end.
Regardless of whether I have entered a shut off notice I always tell tenants that I have scheduled the electricity to be shut off on the day before their occupancy. I tell them to put it in their name but I also make clear that if they don't they won't have electricity it will be shut off. Even my student tenants respond to that.
I'll throw out another approach.
While we typically prefer the tenant transfer the utilities in their own name, we do offer an alternative.
We call it a Utilities Budget Agreement. Based on the average utilities usage for the property, we set an amount the tenant will pre-pay into the utilities account at the start of each month. We keep the utilities in our name and send the tenant an electronic copy of the utility bills each month, so they might track their consumption.
Every three months we reconcile. If the tenant has paid more into the utilities budget than the cost of the utilities, we offer the tenant a choice to a) keep the balance in the account in anticipation of future usage ( i.e. colder weather in winter); b) apply the balance towards the next month's rent or c) {if at the end of the tenancy} refund the remainder.
If there is a deficit at the time we reconcile, we invoice the tenant and the balance is due the first day of the next month. {Note: this has happened to us twice - typically we are able to set the monthly rate such that the account ends-up in surplus.
As an update. I spoke to someone late Friday at the rental company who told me to have the utilities shut off, which I was wary to do but decided to have them shut off on Thursday (day after the pool is cared for) so they have plenty of time to get it turned to their name before its shut off as well as get it turned back on before the pool needs service again. She also told me to send the bills and they would charge it back to the tenants. Then she told me she would contact the tenants and let me know she told them. Unfortunately I never heard back after that. I called back in today and its like starting all over again, they have no clue who I spoke to on Friday and they dont know if anyone informed the tenants or not.
The tenants themselves are very nice people, my grandparents have known them for over a year and I met them personally prior to them renting so even though I dont like the fact that they didnt swap utilities, I dont want them being turned off without notice. I finally got the second check for rent when I got home Friday so I do have at least one months worth of rent. The first check is still MIA and even though I have asked them several times to cancel it and direct deposit it seems like they keep dragging their feet about it. I dont think they are ripping me off, it just seems like I talk to someone different each time I call and no one is communicating with each other from one day to the next. When I called this morning they still hadnt set up the direct deposit and I made them do it over the phone. They asked for all my info again (even though it was on my application) and got it set up. Now I just have to wait (Again) for them to cancel the first check and then deposit it directly. Hopefully things are smoother sailing from here on out. I dont know why this has been so rough for me personally, as I said my mom has rentals through these guys and so does my sister and they have had no issues.
I am resurrecting this thread to discuss a similar situation I've had. Tenants moved into a home in November. I sent them a detailed email with phone numbers of utilities. They are required to put the utilities in their name and to notify me when they have. I received an email shortly after taking residence that they put them in their name. Two months go by and I get a message that the water is going to be turned off if I don't pay in two days. I contact the tenants by email and tell them they must put it in their name and pay the balance off. "Oh, we were wondering why we didn't get a bill. We'll take care of it." January get contacted again. They made a partial payment. There's an outstanding balance about to go to collection. So I pay it with the intention of deducting it from deposits. I'm assured that it hasn't and won't go to collections. Now it's September and I am in the process of buying another property. There is a delinquency on my credit report for the around $125. The utility took the payment, failed to update their system correctly, and it went delinquent in March. So now I'm waiting for Monday to get a letter that it was paid in full in January and also have the claim removed from credit. There's only one person at the utility who is authorized to handle these these matters. It's amazing how much something so small can impact a perfect credit history.
I suppose in the future I will have to call each of the utility companies to make sure things are switched over as they are supposed to be. But what can I do to protect against creditors not documenting receipt of payment?
Originally posted by @Ryan M.:
I was looking through some of these older posts and came across this. Why do you escrow utilities. Seem like a hassle.
Ryan:
We do it for a couple of reasons:
- A considerable portion of our portfolio is comprised of student rentals. When someone has never had utilities in their name in the province, the utility companies will require thy post a deposit/bond (up to three months average usage, based on the past 12 - 24 months). For many/most students this can be a stretch. Some landlords deal with this by including utilities in the rent. Our preference is to have folks accountable for their own consumption. This approach also enables us to put water/sewer costs for our houses in the hands of the tenant {the account/bill must remain in the name of the property owner}.
- Core to our operations is improving the energy efficiency of our properties. Much of this takes place during larger renovations/retrofits, but we are constantly testing new (to us anyway) ideas and solutions. Retaining the utilities in our name provides us with the ability to measure the impact of these changes on the operating cost of the property. Due to privacy laws, we would not have access to this information if the utilities were in the tenants name.
Thus far the hassle has not been that great. However, we are working on an acquisition of a mid-sized apartment complex and may not extend the programme to that property.
