Utility charges stay with the property

[David Stone]

Hi BP! We just acquired a house we are fixing up and may use as a rental.

I found out that the city water/sewer bill AND electricity both stay with the propery.  I am used to water/sewer being attached only. 

Has anyone dealt with this and what strategies have you applied to protect yourself and ensure a massive bill is not left after tenant moves out.

Should/can I request utility set a cap on unpaid balance? Early notification of delinquency? Clause in contract? Additional deposit? 

Any ideas welcome as it gives me something to work with when dealing with utility co... Thanks in advance!

David

Elma, WA

[Marcia Maynard]

It is not unusual for certain utilities to become a lien on the property if not paid. In Vancouver it is the water/sewer and garbage/recycling bills that become our responsibility if not paid.

One strategy is to make sure you receive a copy of the bills that you might end up being responsible to pay. For example, we get a copy of all water/sewer bills (current/past due/shut off notices) and we get a copy of delinquent garbage/recycling bills (past due). 

Be sure to have a clause in your rental agreement about utilities. Here is an example of ours:

UTILITIES.Landlord requires supply and maintenance of the following utilities at the unit: electric, natural gas (if applicable), oil (if applicable), water/sewer, garbage/recycling.Telecommunication services are optional.Tenant agrees to pay for all services and utilities supplied to the premises during the term of tenancy, except __________________________, which will be furnished by Landlord.If Tenant moves out before the end of the lease period, Tenant must still pay for utilities to the end of the lease period, just as rent must be paid to the end of the lease period.Tenant agrees to notify utility companies of the exact date their tenancy begins and ends, and agrees to pay all outstanding utility bills.If Tenant causes any utility to be disconnected, Tenant agrees to pay for reconnecting the utility, plus damages caused thereby.

If we become aware the tenant is not current with paying their utility bills, we call them and talk with them about it. If they do not pay their bill on the next business day, we will serve a "10-day Notice to Comply or Vacate".

Be sure to do thorough tenant screening. Require a sufficient security deposit to protect your interests. Do not touch the security deposit until end of tenancy. Instead, require the tenants to pay-as-they-go for rent, utilities, damages, fees, etc. If you wait until the end of tenancy, the security deposit will rarely be enough.

On the last day of tenancy, call all the utility companies and check on the accounts. It is best if you can make this call together with the tenant when they are handing over the keys. There are a few things you check for... #1 Tenant move-out date and forwarding address has been conveyed to the utility company. #2 Tenant has paid for all utilities to date and there are no more pending charges due. If the utility will not be holding the landlord accountable, they most likely will not share this information with you. If the utility will indeed hold the landlord accountable, they will share all the details, such as payment history, billing history, current amounts due, etc. #3 Utility will be put back into the landlord/owner's name for the interim between tenants to avoid disconnect and reconnect fees. It is also important to keep most utilities on for the turnover and showing of the unit.

Specific to Washington State: The final report on accounting for return/withholding of deposits must be made no later than 14 days after the tenant has vacated and the landlord has regained legal possession of the unit. Therefore, you don't have much time to settle up payment of the last utility bills. That is why it works best to call at least by the first business day after the tenant has moved out. Sometimes it takes a few days for the utility company to do a meter reading and sometimes the utility companies only do meter readings only on a specific day of the month. This means you may need to wait until the utility can determine the amount attributed to the outgoing tenant. I typically check with the utility company again on the last business day before my 14 days is up, to see if the tenant has paid the bill or not. If the tenant doesn't pay what they owe, then pay it yourself and deduct it from the security deposit.