How to charge for oil heat

Question

How do you charge tenants for oil heat? This is my first property with oil heat and I am considering 2 scenarios:

1.) fill tank completely. Make tenant responsible for refill as necessary and they must fill tank back up when they leave with a clause in the lease that they are responsible for all damages if tank were to run dry. I’m worried this would deter people from renting having to deal with this.

2.) charge $100 more per rent and include heat. I estimate the house using about 500 gallons per year which would cost me appx $1200 to fill my 2 250 gallon tanks.

There is not an option for natural gas so I cannot convert. Could you all please give me your thoughts on both scenarios or give me a different one that you use? Also could you include the language you use in the lease for whichever you do?

Thank you everyone!

Amanda Paugas · Answer

I build it into my lease that the tenant is responsible for maintaining oil in the tank. They pick a company of their choice and sign up for automatic delivery (which usually includes a yearly maintenance check as well!). I deliver the unit to them with a full tank and from then on it is up to them to keep it full.

Nathan Gesner · Answer

I have a similar issue with propane. I assume there is a gauge on the tank showing the level. Just record what level it is at on the day they move in. Make them responsible for maintaining levels after that and returning it to you at the same level as when they moved in.

I don't recommend giving it to them full because they could drain the tank and walk off, leaving you $1,200 short plus whatever they owe you for unpaid rent, cleaning, and repairs.

Theresa Harris · Answer

Either option works.  With option 1, you'd need to show them how to check oil levels or just tell them to call the company after X months (whatever is your usual time frame to ensure they don't run out).  Option 2, they may not like the higher rent up front.