Keeping utilities in your name or leaving it to tenants?

Question

Is it better to make tenants put utilities in their name or to keep it in your name and just bill them directly for it?  I haven't read much about landlords doing that, but it seems like it would be simpler in the long run rather than having to jump in and out of responsibility between tenants and worry about shutoffs if tenants don't pay.  I'd love to hear anyone's experience with this either way.  Thanks.

Mark Holencik · Answer

Always have the tenant put the utilitys in their name. They expect this. You have enough to do without straddling yourself with collecting money for a bill the utility company will do and not cost you.

They are more responsible with the usage when it is coming out of their pocket.

Mike Wood · Answer

@Jared Souder If the units have separate utilities, have the tenant put them in their name.  This eliminates any risk on your part that they run out on a bill.

Today, most utilities are very easy to transfer, so that is not a big deal.  I always switch the utilities in my name when the tenants move out (so I have utilities for fixing up the place and showings) and then have the new tenants switch them into their own name.

Marcia Maynard · Answer

Depends on the type of property and it's location.

Some municipalities, such as ours, mandate Garbage/Recycling service for all occupied residential property. Unpaid garbage bills become a lien on the property. For multifamily, the account must be in the name of the property owner. For single family, the account can be in the name of the tenant, but the property owner will be held accountable if it is not paid.

Our Water service comes from the city and if it is not paid it will become a lien on the property. Because water cost is based on use, if separately metered, we require our tenants to set up the water account in their own name and keep current. Since we are ultimately responsible, the city sends us a copy of the water bill. This helps us identify if the tenant is keeping current in paying their bill and also helps us see the water use. If there is an unusual spike in water usage, it points to either a water leak, water waste or unauthorized occupants having moved in. This is helpful to know and we address it right away so we can mitigate damages.

Electricity, Natural Gas and Oil are three utilities in our area which do not become a lien on the property if left unpaid. If separately metered, we require tenants to set up accounts for these utilities in their name. Because we are not held responsible for non-payment, we do not receive copies of these utility bills. If the tenant stops paying for these services (or any other required utility) and service is disconnected, it becomes a violation of the rental agreement and we address it with a Notice to Comply.

We have agreements with all of the utility companies to switch the service back into our name during vacancies. This is important for maintaining the condition of the property and to allow us to use the utilities during turnover/showing. The security reason mentioned by @Steve Rozenberg hadn't occurred to me, so thanks Steve for pointing that out.

Adam Bartomeo · Answer

Most areas do not allow the owner to shut off the utilities even if the tenant isn't paying you.

We put them in the tenants name so if they aren't paying the rent and the utilities then the utility company IS allowed and DOES shut off the utilities. It is the easiest way to get a poor tenant out legally and quickly.

Ben Braddock · Answer

Dont do it!

Prime example.  Propane is included in a lease for one of my rentals; tenant keeps her thermostat on 77 in the winter so I have to limit the number of tanks/refills she has in a 12 month period (in her lease).  Otherwise she would likely use more propane than she pays in rent.

Paul Garcia · Answer

I keep utilities provided by the city in my name. I'm under the impression that unpaid utility bills to the city can eventually result in foreclosure. I've been fortunate thus far and have not had any problems collecting from the tenants. I've also found this to be a really good way to get close with the city employees because your name comes up a bunch (small town pop. 11,000).

Steve Rozenberg · Answer

I can tell you every time we have tried to trust the tenants we got stuck with hundreds of dollars in bills. As soon as the property is vacant we get power switched on because the people that like to "Borrow" copper wiring will look for the red-tag on the meter. And yes even in the nicest areas they do this..

When the tenant is going to move in, one of the things we require is to show proof that they have switched the utilities before they give us the key.

If they can not perform this simple task that should be a HUGE red flag down the road of how are they going to take care of your investment.

Just my thoughts

Cindy Meyer · Answer

A landlord can't just switch utilities over to their name and close the tenants account when the tenant is in a lease and states the tenants are responsible to pay utilities. The landlord cannot just call and switch it over without notifying the tenant. So that is a policy to take in account. When you deside in the lease; the tenants are responsible for the utilities; landlords cannot just steal the accounts FYI.

Steven Gesis · Answer

Hello Jared, great question! What we like to do it have the tenants put the gas and electric in their name and give us account numbers  for verification. This way they are responsible for payments on these accounts and if they do not pay, it will cause a problem for them (including their credit.) In regards to other services (cable, home phone, etc.) we leave those up to the tenants themselves. Those are not necessary.

We like to keep the water in our name for a few reasons. In Cleveland, the water department is very complicated and we like to keep it from being even messier. We have the tenants pay us a standard amount, but if they go over we inform them and send them a bill.

Please let me know if you have any questions.

Keeping utilities in your name or leaving it to tenants?

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