Utilities - What would you do?

Question

Hi all,

I have 28 units all with separately metered utilities. In our area it's just electric and water (we don't have gas, sewer, etc). Currently when a tenant moves in, we have them transfer the utilities to their name and they handle payments directly.

The "problem" we're having is when a tenant moves out, we have to go to the electric and water company and reconnect services which can take 3-5 business days after processing, which delays repairs. Also, if a tenant moves out and forgets to disconnect their utilities (we do remind them and follow up, but sometimes they lie -- we also can't verify as we are not the account holders), we have to provide notarized documentation that a tenant moved out, wait for that to process and then reapply again, which leaves us without power and water at most 1.5-2 weeks.

Would it be best to just leave the utilities in our name, pay it and then bill the tenants directly? We would get separate bills for each unit so we can provide them with documentation on their exact usage and how they're charged. The dilemma I'm having is what if a tenant doesn't pay or abandons the property then I'm stuck with the bill. If we leave it in a tenant's name and they don't pay, the utility company does not put a lien on the property and goes after the tenant for unpaid bills.

What would you all do?

Nathan Gesner · Answer

I agree with Kevin.

1. Keep utilities in the Tenant's name so they take responsibility. You don't want the problem of chasing another payment.

2. Be proactive. When the Tenant gives notice to move out, you can immediately call the utility provider and set a date for everything to move into your name. All the providers I've worked with will let you set up well in advance. Consider calling one week prior to confirm your account is ready to start and the tenant has set theirs to close.

3. Ask if they have a "Landlord revert" option. In my area, the Landlord account always stays open. When the tenant closes their account, the utility automatically reverts to the Landlord.. When a new tenant moves in, the utility switches from the Landlord to the Tenant. It's seamless and you don't have to call and make a switch. This also protects the landlord from problems if your tenant stops paying utilities, abandons the property, or whatever. In my area, pipes will freeze if the utilities are shut off in the winter, so I want them to revert to me and stay on even if the tenant stops paying or closes their account.

Kevin Sobilo · Answer

If they are legally allowed to lien the property as a government entity, I would treat it the same even if their current policy is not to do that. Different people in charge after an election and that policy could change suddenly.

I would push the issue of scheduling the changeover in service. Their responses don't make sense. If someone new is buying the house or moving in, there cannot be a week gap in service. Often times someone sells a house and the new owners close and start moving in the same day! They can't wait a week or more for utilities. Plus if you have no gas heat in winter for a week pipes may freeze and burst!

So, their responses just don't make sense.

If you cannot push the issue to a supervisor and get it resolved, I would contact your state's utility commission. They regulate utilities within your state and can require the provider adhere to the service requirements the state sets.

Kevin Sobilo · Answer

@Victor San Gil, when a tenant moved out, you should proactively call the utility ahead of time and schedule it to be switched in your name as of a certain date so that there is NO loss of service.

So, if a tenant moves out on January 31st, you might call on the 24th and schedule it to be switched into your name on the 1st.

I would NOT keep the utilities in my name and bill them back unless the utility provider was a government entity that could lien the property for an unpaid bill. If you keep the bill in your name you risk the tenant not paying you owing you more money you'll never collect or taking retribution out on you by running up the utility bills.

Victor San Gil · Answer

Thank you for your reply! Currently our utility company does not allow us to switch it to our name until the current utilities are turned off by the tenant nor can we schedule it ahead of time (This is a work in progress as per the customer service agent as they are upgrading their system -- we only recently got online bill access and payments). The utility company is a government entity but does not put liens on properties if bills are not paid. I'll just have to deal with it for now rather than rack up unpaid expenses.

Alecia Loveless · Answer

@Kevin Sobilo I agree with Kevin. There has to be some sort of landlord revert type of billing system. I’d contact the state utility commission ASAP about this and try to force the issue. You should not be forced to wait many days to transfer service. Often I don’t even get a transfer fee when my utilities switch over.

In my area if the electricity went out for a week every time a tenant moved we’d have hundreds of houses with frozen pipes all winter long.

Victor San Gil · Answer

Definitely agree with everyone here. My properties are on a small island outside the USA where things really are more laid back in every aspect of life haha. I was able to speak to a supervisor and we worked out a system where power would be out for about a day until their new system is operational in March, which will support landlord revert utility transfers.

Utilities - What would you do?

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