Charging Bills that are Received After Tenant's Moveout

[Daniel T.]

We're househacking in an Atlanta-area basement and we split the utility bills with the main-floor tenants, who are schedule to move out in the last week of August.  However, since the electricity bill is charged on the 25th of month following the service term's month (so Sep 25th), our tenants will have moved out by the time the bill is charged.  Their previous payment history has been spotty, so we we're worried they'll neglect paying if they have no incentive.  Our options seem to be:

A) Take it to small claims court if they refuse to pay, which probably won't be worth the time/effort.

B)  Hold the security deposit until bills are paid, and deduct them if they're not paid in 30 days.  Our lease's security deposit is worded:  "The balance, if any, of this deposit shall be refunded to the Lessee within 30 days after Lessee vacates, less any charges for cleaning, repair, missing items of equipment or any damages sustained by the Lessor due to breach by the Lessee.", so I think the deduction should be allowable as a "damage" since the agreement states that the bills would be split and paid within 7 days of being received.  If our tenants pushed back and we had to go to litigation, do you think a court would see it that way?

C)  Eat ~$200 of unpaid utility costs.

We're looking at option B, but what approach would you recommend?  And would you recommend changing our split-utility payment strategy in the future?

Thanks so much for you consideration!

[Anna Laud]

@Daniel T.

Hi Daniel! 

It seems like option B is your best plan maybe. One way to go about this is to call all of the utility companies and ask for a bill breakdown in a pro-rated fashion. This usually works best if the utilities were in the tenants name and while you're switching them back over to your name, but it can be done by date as well. 

You only have a certain amount of days to return the security deposit (usually by state legislation) or a breakdown of why it's not being returned fully, or not at all. 

I would recommend updating the lease agreement to include, "any unpaid utility balances incurred during occupancy" or some version of this for leases moving forward. 

It can be two fold on splitting utilities;  

- putting all of the utilities  in the tenants name usually makes them more responsible with things and they won't be running the heat at 78* in the winter, likewise the AC at 66* in the summer and more costly bills are avoided (just examples of being wasteful on your dime)

- however some investors (especially in areas where the winters get very cold) wouldn't prefer to do this as an unpaid bill in the winter may result in frozen pipes and will spilt or keep utilities in their name to avoid more costly repairs

I personally would put all of the utilities in the tenant's name and just make sure I was screening my tenants well ahead of time. Now in some states you still need to provide water etc as part of the rental, but I would recommend usually putting as much as I legally could in the tenants name. 

I offer to help them set up budget bills to avoid unexpected increases and this works out well- they know each month how much gas and electric will be and can plan ahead. this won't usually be the case with water bills, but most tenants aren't watering lawns in the summer, filling up pools, etc.  anyway, so it's not an issue. 

Yes, I would avoid small claims court. You'll pay way more in legal fees that $200, and at that point it would be better to simply 'eat' the loss. 

I would verify this is the last bill to come in as well before I returned the portion of the security deposit as well. 

Hope this helps!