Tenant wants LL pay for high electric bill due to high cost electric furnace

[Levi Perl]

What would you do in this situation?

I bought a property in October 2024, did a rehab from Nov-Dec 2024 and found a renter in beginning of Feb 2025. I signed a 12 month lease to start on 2/20. Utilities were only water and electric. Then, the last few months I find the electric bills to be exorbitant, like 3-4X normal. Because prop was vacant, I assumed its the furnace, as its the only thing that was running. On 2/19 - after the lease was signed - I called two HVAC companies and they both said the issue is that the furnace had no heat pump, and was running solely on 2 heat strips. That means it was never adequate for this house, as the heat strips are only there if and when the heat pump cant work if its too cold outside, but not to run all the time. (This furnace may be adequate for a house in a warmer climate, but not for a house in Kansas City.) Temps were also very cold the last few months. All this was making bills very high. I didn't want these or future tenants leaving because of exorbitant electric bills, so I made the decision to change out the inadequate electric furnace for a gas furnace. This will be installed in the next week or so. In order to avoid questions from the tenants, I was upfront and told them that the current furnace is expensive to run because it is inadequately sized for the house (I didn't mention details about lack of a heat pump) and we made the decision to change it out for a gas one ASAP, which will go to their benefit, and all we need from them is to add gas service. I wanted them to be on the same page as me as to why we decided to change it out and why they should start a gas service, and Also that they should not be surprised if they find their first electric bill to be a bit high. They said okay, but then they were like "will you credit us for what will be the high electric bill?"

Now, I don't really know what will be their bill if they had a normal furnace since 2/20 vs. the current one, but I assume its not more than $30-50?? So to just absorb this and keep them happy I said "I would be open to giving a credit. But how much do you think you are overpaying? Whatever answer, please keep in mind A. You will be using the current furnace for only a week or so B. Temps are much warmer now and C. You are using the electric in other ways now other than the furnace."

How would you have responded to their initial request?
Given my response I already gave, what advice do you have?

And a bigger question: The seller did not disclose this in their disclosures. I did have an inspection before purchase, and to be honest the inspectors never turned on the furnace to check if it was working, and I moved forward anyway. But I also have proof that the seller got a bid for a new furnace in 2022, which may mean they knew the furnace was an issue. Can I sue the seller for not disclosing?

[Theresa Harris]

I would simply tell them no.  Tell them the new furnace is much more efficient, so they will save on their electric bill down the road...and they didn't complain about the 'high' electric bill before, so they didn't think it was a problem.