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water bills paid by tenants

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Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Jan 30 '11, 01:23 AM


In my area, water providers are allowed to place liens on the property if the bill is unpaid. I've had tenants skip out owing water bills. So, on the most troublesome property I've kept the bill in my name and require the tenant to pay me. This has proven to a pain, too.

The water bill arrives right at the end of the month, usually about the 25th. It covers from about the 20th to 20th. Rather than require the tenant pay immediately, with the rent that's due on the 1st, I've given them a copy of the bill and told them to pay with the next month's rent. Trouble is, water usage from (say) the 11/20 to 12/20, which shows up on the 12/25 bill I give to the tenant on 1/1 isn't getting paid until 2/1. The delay isn't really a problem for me, but this particular tenant is moving out on 1/31. So, the 12/25 bill that was due on 2/1 plus the 1/25 bill that would have been due on 3/1 are both due when they move out. Not to mention the partial bill for the end of January, which won't show up until late February is still owed by them. Water is expensive in this location. The minimum bill is about $90. So, these folks owe me something over $200. They're not happy with the big bill at the end, and have forgotten about the fact they paid no water when they moved (Feb '10) nor in March '10. The first water they paid was for the first half of Feb, which was on the April bill. Doesn't help we have a language barrier. The son (early teens) understands the situation, but mom's very unhappy.

Now, if they don't pay when the vacate, I will take it out of their deposit. However, they have done other damage to the property. Between repairs, cleaning and carpet cleaning, and now the water bills, I don't think they will get back much, if any of their $800 deposit. They have already been asking when they're going to get their deposit and have been strongly hinting they want it back right away.

I'd like thoughts on a better way to handle this. I think I will just tell them the minimum bill is about $90, and they should add that onto each rent payment. I'd also like to ask for a $100 water deposit up front, which would be applied to the last water bill. However, in this area, people have a tough time coming up with the full deposit plus a month's rent at move-in. I also don't want to add $100 to the rent and say "water included", because it doesn't take much to push the bill up over $100 a month.



Jon Holdman, Flying Phoenix LLC


Loc R. Donor

Note Investor from Pasadena, California

Jan 30 '11, 01:47 AM


Jon,

How common is that knowledge about the water company can place a lien against the property?

As long as the tenant thinks they are responsible for the utilities and that the burden of payment cannot be placed on you, I would think this is enough to keep the tenants in line.

Sounds like you had a "professional" deadbeat once or twice.



Allen B.

Commercial Real Estate Broker from Memphis, Tennessee

Jan 30 '11, 01:51 AM


When the city owns the water department it is very common that they can place a lien on the property. In my area, several of the cities in North Mississippi require the water bill stay in the owners name PERIOD.

Through years of going through the motions you have described, I have found the best practice is to add the average water bill plus $10 onto the rent with a clause that tenants will have to pay for excessive water bills over average. It is still a pain as since it has to stay in the owner's name the owner has to forward the bill to us to verify.



Account Closed

Landlord from Seattle, Washington

Jan 30 '11, 01:58 AM


The same thing is true in Washington state. I can put the bill in a tenant's name, but if they don't pay the bill stays with the property.

Over the years we have done it both ways. I'm more inclined now to using a set monthly amount (keep the bill in my name) and letting them pay the difference when the actual bill comes in. At least your collecting when the water is actually do.



Brandon Kamm

Commercial Real Estate Broker from Memphis, Tennessee

Jan 30 '11, 03:12 AM
1 vote


I would average out 12 months of bills and just have it added to rent each month, hn advertise as water included. You may win some/lose some but without the headaches of collecting it separately it may save some time.



Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Jan 30 '11, 03:17 AM
1 vote


Bumping up the rent by $90 and saying "water included" will probably make the place uncompetitive. I know it shouldn't, but people just compare rent-to-rent.

Of more concern is that I have more than once seen properties in this where its clear that a laundry service is being operated. Our water rates in the entire area are high, and this particular city's is very high.



Jon Holdman, Flying Phoenix LLC


Dale Osborn

Mobile Home Investor from Spanaway, Washington

Jan 30 '11, 03:37 AM
1 vote


The problem with including water in the rent is then they have no skin in the game. They will turn on the hose and let it run until they have a 3-inch water level all over their yard and running down the street. They have to know they are paying for the water then they get water conservative since they are paying.



Mike Grayford

Rehabber from Simi Valley, California

Jan 30 '11, 03:44 AM


Instead of asking for a $100 water deposit up front to help cover the cost of the last month's water bill, maybe you can spread that out over the term of the lease and increase the rent by $10 or $15 a month.



Joel Owens Moderator

Real Estate Broker from Canton, Georgia

Jan 30 '11, 03:53 AM
1 vote


So are you saying the water department simply places a lien instead of turning the water off??

Here they don't mess around.If you are over 30 days they put a red sticker on the door and cut the water off.To reconnect you have to pay back money owed plus a 50.00 reconnect fee.

What do the tenants do without water??

I guess in areas like that you would have to put an extra line item expense for utility loss turnover knowing they can lien a property and the possibility of getting stiffed by the tenants.

Anyone else?? This is an interesting thread.



Medium_allworldrealtyJoel Owens, All World Realty
E-Mail: [email protected]
Telephone: 678-779-2798
Website: http://www.AWcommercial.com
www.AWcommercial.com 678-779-2798 [email protected]


Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Jan 30 '11, 04:27 AM


Thanks everyone for the input.

They will cut off the water if the bill isn't paid. But rather than going after the tenant (or, perhaps in addition to), they can put a lien on the property. i doubt they would start a foreclosure over a $300 water lien, but it would be my problem if I wanted to sell.

I'm going to call and find out about the trash service, which has also been a problem in this property. Like all cities in this area except Denver, you have to hire a private trash service. Typically about $12-15 a month for weekly service. If it is, I'll say there's a $100 charge for water (and sewer) and trash in addition to the rent. And say if their bill is over $100 a month, they pay the excess. I'll start collecting that with the first month's rent, at move in. We'll see if this works.



Jon Holdman, Flying Phoenix LLC


Marc Freislinger

Real Estate Investor from Phoenix, Arizona

Jan 30 '11, 04:47 AM
1 vote


Originally posted by Jon Holdman:

They will cut off the water if the bill isn't paid. But rather than going after the tenant (or, perhaps in addition to), they can put a lien on the property. i doubt they would start a foreclosure over a $300 water lien, but it would be my problem if I wanted to sell.

I ran into this problem with one of my rentals. The kids didn't pay the water when they moved out, and a lien was placed on the property. The water company refused to turn on new surface at any house I owned, regardless of who's name it was in, until the lien was paid off.

For a solution, we include it in the rent, with a separate addendum. We take the prior 6 months of usage and average it, then include an excessive usage clause, requiring them to cover the cost if it's more than $25 over average. We have a clause that allows us to reevaluate this at any time, using the previous 6 months. So if it's excessively high for 3 months, we reevaluate and raise the rent.



Joel Owens Moderator

Real Estate Broker from Canton, Georgia

Jan 30 '11, 08:55 AM


With utilities on the rise I can see it becoming more and more important on a long term hold to know if they will lien the property or just chase the tenant for payment.

In my area the bill goes with the tenant.Based on the credit of the tenant these utility companies collect a large deposit to turn on anyways.This way if the tenant runs they can cover most of the bill.



Medium_allworldrealtyJoel Owens, All World Realty
E-Mail: [email protected]
Telephone: 678-779-2798
Website: http://www.AWcommercial.com
www.AWcommercial.com 678-779-2798 [email protected]


Linda R.

Real Estate Investor from Southeast, Iowa

Jan 30 '11, 09:07 AM


I don't have an answer but just wanted to share that in the town I have rentals in, if they water is turned off, you must move out that day or the next morning depending on when the water is shut off and then the property is red tagged and no one can move in and the water isn't turned on until the dwelling is inspected by the city zoning, plumbing and electrical inspector. I require my tenants to have the utilities in their name, if they do not pay it is on them, not me, but I have all my properties in my name as a backup so if someone doesn't pay, the water and electric is not shut off so I do not end up with frozen pipes. I find out when the utility bill comes to me.



Jon Holdman Moderator

SFR Investor from Wheat Ridge, Colorado

Jan 30 '11, 09:14 AM


That's exactly what the gas/electric company does. Bill is in tenants name, but as soon as they disconnect it reverts to me. Water just doesn't work that way, though. Plus, the water company will let them get several months behind before they disconnect.



Jon Holdman, Flying Phoenix LLC


Linda R.

Real Estate Investor from Southeast, Iowa

Jan 30 '11, 09:55 AM


Jon,
Water, sewer and electric come from the city utility company here, gas from a different company. Good luck!



Just Don

Jan 30 '11, 10:17 AM


'they bill ever'other month 'here'. That would make it worse.

I thought our bills were high. Used to be about 17 bucks a month but now about 20 on the minimum amount. Been over the min. like once or twice.

I would have it put in their name and check to see it gets paid timely.

OUR town sends out a letter so many days if not paid,,,to the landlord to notify them of possible problem.

Here the lien stays with that property, they wont turn on that address till old bill is paid. But they do transfer to owners bill if they think it helps them get there money.

Looks to me Jon, you should collect bill upon receipt. Jan in Jan,,,that way it gets collected sooner and doesnt add so steep at the end. THEY know its coming.

The way your doing it now is they have too much lag time,especially if they turn deadbeat.

WOW that is a very high rate for water. I would use every trick in the book to conserve there. Dual flush, ultra low shower flow reg., pressure reducers. Maybe even ban lawn watering OR install low water landscape.

good luck with your prob.



N.A N.A

Tucson, Arizona

Jan 30 '11, 10:56 AM


I'm planning to get one of these for my daughter for her family:

http://www.ehow.com/way_6175760_can-put-timer-shower_.html

Can You Put a Timer on Your Shower?
By Kay Whittenhauer, eHow Contributor .updated: April 1, 2010

Installing a timer on your shower is an effective way to reduce showering times. In turn, shorter showers are an effective way to use less water. ....
.Which Type of Shower Timer Is Best?
There are two types of shower timers. One is an actual timer that adheres to the wall of the shower. In this case, the person showering is on the honor system to turn off the shower when the timer expires. As you can guess, this is an imperfect method for reducing shower times.

The second type of shower timer attaches to the shower head and actually restricts the flow of water when the time expires
.
more: http://www.24-7pressrelease.com/press-release/discovery-channel-green-planet-features-the-shower-manager-as-an-ecofriendly-device-to-save-money-water-and-energy-101496.php

http://www.showermanager.com/

THIS is the one I want for me:
http://www.showertimer.com.au/standard.html

Disclaimer: I am not involved in either company in any way--haven't purchased yet, or sought other information. I found them because I wanted a timer for me that would shut the water completely off.

Hope this can help you.



Account Closed

Landlord from Seattle, Washington

Jan 30 '11, 11:16 AM


I had one tenant literally rack up $1,000 in water bills. The tenant apparently kept calling and arranged some payment but left the majority unpaid. I found out when the tenant moved out. I asked why I wasn't notified, and the city said it was necessary to request to be notified.

That was many years ago now, but I learned from it. Now I include language in my lease that specifically states that unpaid utility bills will be subtracted from the deposit. I also monitored there payments or lack thereof.

I would be interested in how others work through this problem as well. It seems that babysitting is required, but I like to minimize that as much as possible.



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