For a Duplex does the landlord pay for water, sewer, and trash?

Question

I received a bill for $1,300 from the sewer company, basically all of my cash flow. Is it common practice for the landlord to handle this? The units are not individually metered. Could I charge a set amount per month for this?

JD Martin · Answer

It is common for utilities to be included with rent when they are not separately metered. You may be able to sub-meter, depending on rules/laws where you live. You may also be able to demand bill (can't remember the exact term) based on size of the units, i.e. one unit that has 60% of the SF pays 60% of the bill. If you don't want to break things apart, build the costs into your rent. But know that people waste more utilities when they don't have to pay for them directly.

Easiest thing long-term is to have everything separate and let tenants pay their own utilities. $1300 is a hell of a sewer bill - what are the charges breakdown, and why don't you have a similarly large water bill? Sewer bills are almost always dependent on water usage.

Ben Scott · Answer

I'm in Oklahoma City and have two duplexes. I pay for the water/sewer/trash on each because there is only one meter. Trying to decide who used more water than the other would be unneeded drama. I'd recommend estimating the costs of water/sewer/trash and building into the rent.

Darius Ogloza · Answer

Hate to sound like a scold but this is an issue that you should have been prepared for.  Finding out a substantial recurring cost after you have already made the investment is sub-optimal.  In all multi-unit properties, checking on who is responsible for what utilities should be among the very first steps you take because these have potentially enormous implications on the value of the investment - this is particularly true of heat/AC in extreme climate areas.    In some jurisdictions, it is illegal to require tenants to pay bills that are not separately metered.  You should research your particular jurisdiction for applicable law on this issue.

Darius Ogloza · Answer

As a general rule of thumb, tenants pay separately metered utilities unless you negotiate some other arrangement with them.  Landlords pay undifferentiated utilities.  It appears your property manager is telling you that property owners observe these general rules in your area.  It also appears that he/she is telling you that requiring tenants to pay sewer would violate their leases.

Common or not, it may be illegal to try to require a tenant to pay for a neighbor's use of utilities.  I do not know whether Missouri allows this or not but in California you could get hit with an unfair business practice complaint and have the Attorney General's office to answer to.

Nathan Gesner · Answer

When purchasing an investment, it's important to understand the expenses. Many multi-family properties are advertised with the income, but they don't tell you the expenses.

$1,300 is a ridiculous amount for a duplex. I think the average cost of water/sewer around the country is less than $100 a month. I would investigate to see if the renters are using excess water, most commonly caused by a running toilet.

If your tenants are under a lease, you can't change the terms unless all parties agree. It's unlikely you'll convince them to take responsibility for utilities. If they're on a month-to-month, you can make changes with 30 days notice.

There are a few options:

1. Raise the rent to cover utility costs. If comparable units rent for $1,000 and the average utility bill is $200, then you raise the rent to $1,200 and include utilities in the rent. When you do this, I recommend you put in your lease that the rent includes utilities "up to $225 a month" and that tenants are responsible for anything above that amount. That protects you if a leaking toilet goes unreported and the water bill jumps to $500 in one month. It also protects you from the tenant that runs four window A/C units 24/7 while leaving doors open.

2. Split the bill each month. This one is more fair but it's time-consuming. You receive the bill, you split it between the tenants, and then add the charge to their account. If both units are generally the same, you can split the bill 50/50. If there's a big difference in size, number of occupants, or amenities (washer/dryer, dishwasher, etc.) then you may need to generate a formula that better reflects actual usage.

3. Pay to split the utilities. This is best because it makes the tenants responsible for their own accounts, simplifies your life, and avoids any disputes over who's using what. However, it can be expensive to split things up.

I hope this helps.

Steve Morris · Answer

"We have a 6 unit (15 tenants) & it averages $75/month TOTAL"

Dear god, $15/unit/month for water/sewer?  Can I run a pipe from NY to Portland?

James G. · Answer

@JD Martin Is it also common to bill the tenants for this if it's NOT individually metered? Is it unheard of? My property manager manages several units and says I am the only one who asks if we can bill the tenants for water, sewer, trash on a duplex. I feel like it's eating all of my cash flow and I feel like it makes more sense.. She says its up to me if I want to send a notice to the tenants but that they will have a right to leave afterwards.

Joe P. · Answer

@JD Martin makes great points as always. @Darius Ogloza is correct in this is an item you should have known prior to sale.

$1300 sewer bill sounds like a past due bill from the previous owner, though? Why else would you get a bill for $1300? It is a sewer cost for the entire year? If so, that bill should have been partly paid by the seller and partly paid by the buyer at settlement, no?

Something is OFF with these details. Very much could have been a miss on your part, which is sad, because you'll have to eat it for a fiscal year, and then either raise rent by 100 to cover this or say its a required piece of rental dues (1000 rent + 50 per month for sewer, for example). But ultimately, I need more info to know if this is a standard bill, something in arrears, or something that should have been covered during your sale.

JD Martin · Answer

In a duplex I would say it is uncommon. In a larger unit I think it is also uncommon but some places do use the demand billing to apportion costs if it is legal where you are. Again, I would be looking at the source of the large bill first. $1300 sewer for a duplex is a huge bill. What was the water bill?

Gerald Harris · Answer

is the $1300 for a year (aka $110 per month)... if it is $1300, you have a definite problem happening, something is leaking somewhere...

For a Duplex does the landlord pay for water, sewer, and trash?

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