Tenant in nice property not paying utilities

[Tanya F.]

We had new tenants move in this past April into an A/B property and we learned they haven't been paying the gas bill.  Their credit was 675 and income was good and all references checked out as excellent.  We include the electric and water utility in the rent, but the tenants pay the gas. We've done it this way for many previous lease terms, but we may change that after this experience.

They made no gas payments since moving in. In the summer, the only gas used is for the hot water heater, and the water going to the hot water heater is preheated by solar. So the summer gas bill is tiny in terms of therms of gas used, but there's a ~$20 fixed distribution charge, which is pretty standard as far as I can tell. So (maybe because they are rebels?)  they decided not to pay, and the gas was shut off two weeks ago. The house is plumbed strangely so one of the two water heaters is shared, so other tenants had no hot water (there were a series of cloudy days).   Those other tenants pay the gas for the shared clothes dryer. 

So the bill should be in our name.  We don't want to get into a battle. We're looking for help here in drafting a letter to them to say how unacceptable this is.  Who knows what other bills they aren't paying.   They need to be told this is serious. This unit is being rented under market rate. So we can raise the rent next spring for sure.

After you have accepted tenants, do you ever re-screen them before renewing? I'm sure their credit rating has tanked after not paying gas since April. They are also supposed to share duties mowing the lawn, and have been slackers in that regard, according to the other tenants.

So, any ideas for wording our letter?

[Marcia Maynard]

It all goes back to the original agreement, as stated in the lease. In your letter, print the clauses that pertain to the issues and give them a timeline for compliance. Serve a "comply or quit" notice at the same time if you want to use a stronger fist and are prepared for a vacancy. But it seems that won't be necessary if indeed they are resolving this with the utility. I would avoid the use of any words that sound judgemental and would stick to facts, cause and effect.

I think it's reasonable to make an accounting of what their non-compliance has cost you and bill them for it. But if there is a gray area, then I would absorb the cost and take a lesson from this experience.

What would it take to correct the plumbing issue and separate the connection between the two units? You know you are on shaky ground if one tenant is paying for utility usage for another. However, since both parties are required to pay a fixed distribution charge and if this problem is not linked to usage, then you can address that head-on.

We pay for water usage at a one of our multifamily properties (an 8-plex) and factor it into the rent. This is because the units are not separately metered. Since yours are separately metered it makes more sense to fix the plumbing issue. If not, include water/sewer in the rent.

Have you considered hiring a landscape maintenance company and factoring that into the rent? We do that for our multi-family properties. Too much can go awry otherwise. It also gives us a chance to have extra eyes on the property.

Whether the rental agreement is MTM or a longer term lease, if all parties agree, then it may be possible to change some of the terms of the agreement even before the end of the term. Everything is negotiable. Put the changes in an addendum or write a new rental agreement. A lease binds you only if one party doesn't want to budge. At least that's the case in my jurisdiction; check with what's legal in yours. If you make changes that result in a win-win, then it is likely you will be able to garner support and mutual agreement.