Who pays the utilities in a rental property? Public utilities generally are water, sewer, garbage, electric, and gas. This can mean the involvement of one or multiple companies. To complicate matters, government can sometimes control the responsibility of payment of utilities. For example, some counties, depending on location, can mandate that the property owner is completely responsible for the utilities. Like many facets of renting investment property, this question does not have one simple answer.
Why keep the utilities running when a property is vacant? The property owner obviously pays the utilities during vacancy. The lack of utilities can cause problems - the inability of vendors to complete necessary work to rent the property, landscape dying during drought or dry conditions, pipes bursting during a freeze, the inability to show a unit properly, and more. Keeping them on is definitely a good practice.
What utilities become the tenant’s responsibilities? It depends on the property, the type of utility, area rental practices, and more. In most cases, the tenant bears responsibility for most or all of the utility payments unless the rental market or a governing body dictates otherwise. As your property management company, we know that it is important to all parties clearly understand their responsibilities. Therefore, we have a clear agreement with the tenant prior to placing the tenant in the property and the utility payments clearly outlined in the signed rental agreement.
Why should a property owner not turn off the utilities on tenants? Sometimes situations arise when the property owner may feel the answer to a bad tenant situation is to turn off the utilities - the tenant is not paying the rent; the landlord has given the tenant notice to vacant and they are refusing to vacate; the tenant is not taking care of the property. This is not the solution to any tenant situation and turning off the utilities is a dangerous practice for the landlord.
The Uniform Residential Landlord Tenant Act (URLTA) requires property owners provide habitability to all residents. Most courts generally view lack of running water, electrical, and/or garbage pickup as an inhabitable condition.
Many states have laws specifically prohibiting turning off tenant utilities; some are more specific and rigid than others. In most states, the landlord may not shut off utilities if the tenant is behind in rent or force the tenant to move out. Utilities should only be shut off by the landlord in the event of emergency or so that repairs may be made, and only for a reasonable amount of time.
If the landlord intentionally does not pay utilities and the service turns off, that can be an illegal shutoff. Turning off utilities can provide a tenant grounds to sue the landlord for “retaliatory eviction.” This is definitely a dangerous move and can lead to costly legal procedures, large settlements, and or/fines. It is far safer to do an eviction based on non-payment of rent or flagrant violations of the rental agreement.
Common sense concerning payment of utilities is the best course of action. We will always advise you of any action needed when a property is vacant or if there is a tenant related problem. Our first priority is to protect your investment.
