Previous landlord wants me to pay power bill?

Question

This is slightly complicated so please bear with me.

Background: I bought an investment house in October 2019, put the electricity bill in my name for the month as I painted and did some minor touch ups.  In November tenants moved in, I took my name off the power bill and the tenants put it in their name.

Fast forward to today, October 30, 2020.  I get a call out of the blue from the former owner, who I have never met, who says he got a bill for the property for the last few weeks for $75.  He texts me the bill and I call the power company.  They tell me he had a "landlord account" and that he never canceled it, so any missed payments are his responsibility.  I cannot put it into my name as a landlord until the former owner cancels his account, plus they require you to own 10 homes, which I do not.

The representative from Duke energy would not tell me the specifics about what the problem is with the current bill, so I can only assume the tenants have missed a payment.  The previous owner scheduled the power to be cut off.  I called the tenants and told them they need to contact the power company and make sure their bill is paid up.

The previous owner wants me to pay/assume this $75 bill, which I don't think I have any obligation to do, legally or ethically.  He was the person responsible to cancel his special "landlord account" with the power company, and I fully paid my bill for the month it was in my name.

Am I in the wrong?  Has anybody ever heard of this happening?

Kyle J. · Answer

Well, of the three parties involved in this story....you (the CURRENT owner), YOUR tenants, and the FORMER owner, I can tell you who I think has the LEAST legal/ethical responsibility to pay this utility bill. That would be the FORMER owner.

Assuming he can prove this bill he received was due to your tenants not paying their bill (as opposed to being from one of his other properties), how is it right that he should have to pay it?

Your tenants should pay their own bills (my lease requires tenants to start utilities in their name AND keep utilities in their name and make timely payments). However, if they don’t for some reason, you should probably pay him and then work it out with your tenants because I can’t imagine a scenario where he should have to pay this bill or be the one to work it out with your tenants.

Just my two cents.

Danny Polanski · Answer

I would pay the $75 after he proves he cancelled the landlord acct and also tells me what this bill is for and when.

Once they prove this, then I would take it up with the new tenants.

$75 is nothing to get anxious about.

Matt W. · Answer

@Kyle J.

Yes, I agreed that the responsibility lies with the tenants.  My lease states that they are responsible for utilities.

However, the previous owner entered into this landlord program with the power company, I did not.

Somehow he or someone at the power company screwed up cancellation. He basically was acting as a co-signer for the power bill.

Steven Foster Wilson · Answer

Tell him the facts and move on, no sense in wasting time with a guy like this.

Matt W. · Answer

Hi everybody,

This "issue" was further complicated by the tenants not speaking English and requiring their 11 year old daughter to translate things like late fees, disconnection, etc.

The tenant ended up paying the bill and the former owner officially had their account closed, so all's well that ends well.

Thanks to everyone for their advice!

Will Gaston · Answer

@Matthew Wilson It may not technically be your responsibility but I would pay the $75 and here is why.

The real estate world is littered with former investors that got worked up over these situations about fairness, minor repairs, petty spats with tenants, security deposits, etc. They invested too much emotional energy into an issue that could be fixed with a few dollars. They stopped investing because it became too taxing. The opportunity costs of these minor situations are tremendous.

Don't be like those people. I used to be one and am so glad I let all of the little stuff go now. Focus on the big wins in real estate like buying more deals and creating more value.

April L. Williams · Answer

Matthew Wilson: I'm in agreement with Danny Polanski on this one. I wouldn't pay it until it's out of his name, which I'd require "proof in hand." Then, I'd make a decision from there as to how to handle the situation further. I know ethically, it's not right you get stuck with the bill, but I'm more concerned that you don't attach your name to something that could potentially cause you way more drama down the road. If I had to end up paying a $75 bill to "pick & choose" my battles and put parameters in place to keep me out of situations like that in the future, that's probably what I'd do, but really depends on the circumstances once you find out what's really going on.

Previous landlord wants me to pay power bill?

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