Unpaid utility bill

[Eric Stewart]

I’ve had a horrible tenant this first year with my property. Let’s just say that this was not a good start to my RE business. 
Anyway, the tenant didn’t pay their water bill for the duration of the lease and now $2000 is owed. The utility provider never contacted me about it so I didn’t know until they got evicted. Is there anything I can do to push this cost on the tenant somewhere or is this something I have to pay?

Thanks for any guidance 

[Jonathan Greene]

If the tenant is gone, it's unlikely you have any recourse. Did you already return their security deposit without checking for outstanding bills on the property? Did the lease specifically say they pay for water? In a lot of areas, water and sewer is on the landlord so it is possible they did not know if they were paying all of the other bills.

[Theresa Harris]

Do you still have their deposit?  I'd also talk to the water provider and find out if the bill follows the tenant or stays with the house (where I am it is the later for water and former for everything else).  My guess is if you had to evict them, the deposit was used for unpaid rent.

For future, if you have the tenant pay the water directly (and it is tied to the house), get a copy of the bill either every month or every couple of months to make sure it is paid up.  And at the end of the lease, any bills tied to the house (ie if they don't pay, you have to), get a copy of the final statement to show it was paid in full before you return the deposit.

My water company won't let the tenant put the bill in their name, so I send them the bill every 3 months (it is quarterly) and they add it to their rent.

When the next tenant goes to move in, get proof that all utilities are in their name before you hand over the keys.

[Arsen Atanasovski]

If you property is in Detroit you setup a landlord account with the water company and any tenant that comes in opens a account in their name and follows them in your case it will be you and then a tax lien on the property they will get their money either way. Another side if your property is not in the city and in the suburbs of Detroit they do not bill the tenants it goes directly to the property owner and the owner is responsible. What I do and in my lease I did month to month lease and the lease states the rent amount plus the water if the rent or water is not paid in full I can evict and late payment and all other fees is added because in the lease the water becomes the rent. The judge will see that and it states your rental amount is xxxx plus water utilities. You need to keep in mind the person that was living in your property is a seasoned lowlife. I’m sorry a seasoned tenant that knows the system and used it to their advantage. I hate to say it but the $2000 you have your going to end up paying for it. There is a new policy in one of my properties city districts that they will whole the landlord license until the water bill is paid in full and needs to be in 90 days if not they will fine you, I have no clue how water bills effect the inspection of your property but now it does. When I had a lowlife in one of my properties during Covid they racked up a $600 bill and I was demanding the city to turn off the water they said no it’s federal law that the water needs to be on. And in the end I paid for it. This is a rough game to play you just need to know rules and play them 

[Drew Sygit]

@Eric Stewart no offense, but this is what happens when you don't do enough research before buying a rental and DIY managing.

https://www.biggerpockets.com/forums/88/topics/1106522-1st-r...

Why didn't your agent Collin educate you about all this? 

Isn't he an "investor-friendly agent"?

We keep trying to tell everyone that a PMC is the BEST member of your Core 4, not an agent.

Since your property is in Eastpointe, the water bill will stay attached to the property - unless you want to go through a ridiculous Water Transfer process to put in the tenant's name. 

We know the investor that sued the City of Eastpointe to force them to create the program to meet Michgian Statutes and even contributed to the case. In response the city created a program with so many hoops and escapes in it, that it's baiscally useless.

PM us if you'd like to know the best way to avoid this happening in the future and why cities do NOT want to put water in the name of a tenant.

[Michael Smythe]

@Eric Stewart only recourse is to take tenant to small claims court, which you'll need supporting language in your lease to win.

Then you'll have to go back to court to get a garnishment against tenant's bank or employer. You can also try to garnish state tax refund.

[Eric Stewart]

Thank you everyone for your insight and help. 
Wasn’t a great first start but I will take what I learned and apply it to my future properties. 

[Henry T.]

Quote from @Jonathan Greene:

If the tenant is gone, it's unlikely you have any recourse. Did you already return their security deposit without checking for outstanding bills on the property? Did the lease specifically say they pay for water? In a lot of areas, water and sewer is on the landlord so it is possible they did not know if they were paying all of the other bills.

 In Washington state they also tie Electricity on the landlord, regardless of name on account. You have to constantly monitor. Hey, another reason to raise rent.

[Bob Stevens]

Quote from @Eric Stewart:

I’ve had a horrible tenant this first year with my property. Let’s just say that this was not a good start to my RE business. 
Anyway, the tenant didn’t pay their water bill for the duration of the lease and now $2000 is owed. The utility provider never contacted me about it so I didn’t know until they got evicted. Is there anything I can do to push this cost on the tenant somewhere or is this something I have to pay?

Thanks for any guidance 

 NOPE, this is 100% on you. Why did you not track the bill? Suck it up and move on. Its Detroit I assume you made at least 20% net, so now pay this and your still way ahead of the game 

[Dave Poeppelmeier]

Quote from @Eric Stewart:

Thank you everyone for your insight and help. 
Wasn’t a great first start but I will take what I learned and apply it to my future properties. 

Sorry to hear about having a lousy resident right out of the gates. If they just didn't pay the rent and left you with a big water bill and nothing much else, you got off pretty easily. Here is what I would say: pay the bill and move on. Is hours and hours of hoop jumping, paying attorneys to garnish their wages (if you have their SSN and whatnot from their application) worth $2k? For me it would be no. Time and emotional energy are some of your most valuable resources. I would just chalk this up to a learning experience and move on. Besides, the harsh reality of investing is it's going to take a few to several properties before they start to stand on their own and you don't have to keep pumping personal money into your business. Just don't let something like this knock you out of the race. 

However, what I do to avoid this is I have all of my properties on autopay, and I make the water bill part of the rent. Rent and water are due on the 1st. If they pay rent and not water, guess what? Late fees and the 3-day process start. Do I collect every cent of the water bills with move in/outs and whatnot? No, but it's worth my sanity and not having to deal with the big water bill situation you're dealing with now. Just my two cents. Best of luck to you. 

[Eric Stewart]

@Dave Poeppelmeier. Thank you very much. I think this was the most helpful. I didn’t come here to get ridiculed for making some mistakes like a few of these other posts suggest. I’ll learn from them and grow. I will add your suggestion about autopay for my next tenant. 
Again, thank you, Dave. 

[Alecia Loveless]

@Eric Stewart In my area it is standard that the landlord pays for the water and sewer and just builds that into the amount they charge for rent. Most of my units average about $30/month. I do have two buildings that the water is on a flat rate fee. It is way more expensive than the metered and my 3 unit building costs about $1400/year. I can’t imagine a system where the water bill would be $2000 for one year.

In my lease I have a table of possible utilities and specifically check off whether the landlord or tenant pays for what. I also have every tenant that is listed on the lease initial every page of my lease so there is no question that they have acknowledged everything that is included. I also initial every page. We sign two copies so I have one and they have one.

This helps limit problems.

[Nathan Gesner]

Quote from @Eric Stewart:

There are ways to prevent this, or at least dramatically reduce the likelihood of it happening again.

1. Ensure your lease states the tenant is responsible for setting up and maintaining utilities throughout their lease. If they go delinquent on a utility and it is turned off, that should be grounds for termination of their lease.

2. Do not hand over keys until you personally verify everything is done. Tenant has paid the deposit, rent, set up their utilities, and anything else you require. If a tenant wants to move in on a Sunday and the utility company is closed, they need to set up utilities to start in their name on the Friday before so everything is ready for them. DO NOT hand over keys until everything is verified.

3. Ask the utility company if there is a way for you to monitor utilities. Some companies notify the landlord any time a payment is delinquent or when a utility is about to be shut off. This is important. If the tenant gets behind on utilities, rent is probably next.