Best Way to Handle Utilities During ADU Construction?

Question

We’re starting construction on the garage at our rental property to turn it into an ADU for my aging mother. Our current tenants are moving out about 2 weeks after we break ground. We’re building it ourselves on a pretty tight budget, so realistically it may take 6–12 months before she moves in.

I’m trying to figure out the cleanest way to handle utilities with future tenants. Initially they’d need to put utilities in their names, but once the ADU is occupied it seems like it would make more sense for us to take them over and either split costs or charge a flat utility fee.

Has anyone structured a lease around a transition like this? Any advice or things to watch out for? It feels more complicated than I expected.

Richard F. · Answer

Rather than a second meter from the utility company, you can also just use a sub-meter mounted in a convenient location to read. I have used this method numerous times over the years, saving our Clients a much large installation expense. I add a "special term" to the Rental Agreement, requiring the Tenant to take a picture of the reading on/near a specific day of the month and email it to me, so we can deduct their actual usage from the utility company total (which is billed to Owner), and bill each Tenant separately and accurately. It has never been a problem for Tenants.  This is a great example.

John Underwood · Answer

Get a second meter installed for the ADU.

Brandon M. Townsend · Answer

One thing I'd think about now is how the property will function long-term, not just during construction.

If the ADU will eventually be occupied by your mother and the primary house will be tenant-occupied, I'd evaluate whether separate utility metering is feasible before walls are closed up. Even if you don't install separate services immediately, planning for it now can save a lot of headaches later.

If separate metering isn't practical, I've seen owners handle it a few different ways:

• Owner keeps utilities in their name and charges a flat monthly utility fee• Owner keeps utilities in their name and bills tenants based on actual usage or an agreed percentage• Tenants pay utilities initially, then execute a lease amendment when occupancy of the ADU changes

Personally, I'd avoid a situation where tenants are paying utility accounts that will ultimately serve both units. That can create confusion and disputes once the ADU becomes occupied.

I'd also verify local landlord-tenant requirements regarding utility allocation and RUBS (Ratio Utility Billing Systems), as some jurisdictions have specific rules about how shared utilities can be billed.

From a planning standpoint, it's much easier to solve utility allocation before construction is complete than after tenants and family members are already living on the property.

Are the house and ADU going to share water, sewer, electric, and gas, or are you planning to separate any of them?

Jim Johnson · Answer

I’d probably think about this less as a temporary utility setup and more as designing the long-term operational structure now before the next tenants move in.

If the ADU is eventually going to share utilities with the main house, having tenants fully control the accounts at the beginning can get messy later when you need to transition everything back into your name mid-lease. That usually creates friction around billing, reimbursement, and expectations.

A lot of owners in shared-property setups end up doing one of these:
• Keep utilities in the owner’s name from the start and charge a flat utility fee or RUBS-style allocation
• Build an estimated utility amount into rent
• Submeter where feasible for cleaner separation long-term

Since your timeline could realistically stretch 6–12 months, I’d probably optimize for the future operating model instead of the temporary construction phase. The cleaner and more predictable the system is upfront, the fewer headaches you’ll have once your mother moves into the ADU later.

Henry T. · Answer

In all Wa State it doesn't really matter whose name the Elec bill is in, because the owner, Yes the owner is responsible for the elec bill. So just write the rules who pays electricity into your contract and hope you don't have to chase them down.  Because the utility will ONLY come after you.  You also cannot have a legal ADU in Seattle without a separate electric meter, separate elec meter and billing is required to be a certified ADU. And you must have a kill power switch outside the building. Also "whole house" surge protection may be required too. Rental registration will want to see your certificate of occupancy.

Henry T. · Answer

That's really weird. Olympia legislated just a couple years ago (basically) that owner is ultimately responsible for electricity. I would think you would be able to see the usage of YOUR property. I've never run into this. If you don't want to have separate billing from the utility, in other words one account for the property, but still know accurate usage of the garage? Buy a used electric meter on ebay and have an electrician install it. Mount it on the inside next to your breaker panel, so your utility reader doesn't see it and mistakenly read it.  I'm glad you're not actually in Seattle. That's good.

https://www.ebay.com/itm/190729189781?_skw=used+electric+met...

Ahna Van gaest · Answer

Hi Henry, thanks for the tips! I'm north of Seattle in a small town so I don't have to deal with quite as much red tape.  Here the owner is resposible for the city bill that includes water, sewer, and fiber internet. This bill I can always log in and see, even when it is technically in my tenants name.  However, when I called the private electricity company, they wouldn't give me any details on usage because it's not my account. Is this the case in Seattle too, do you know?  Do you have access to the details of their account? Like, whether they are delinquant or not?!?

Ahna Van gaest · Answer

Thank you for the idea, Richard!  I am unable to separate utilities completely, though that would be my preference, but this is a good option.

Alan F. · Answer

Unfortunately ive seen alot of failures with the leviton units, e-mon d-mon units have been around for decades and are much more reliable.

op probably has gas & water to consider also.

people think converted garages are easy, generally they're not, slab depth, rebar, drains etc. Saw 1 diy' er cut the PT cables in a slab.

Alan F. · Answer

Ideally you'd want each unit to have separate utilities so tennants are responsible. Getting separate utilities to the garage only may have challenges as some AHJ's/utilities require a separate APN # (address) Ive seen variances issued in some areas (i.e. 1/2 address). Id highly suggest doing some serious due diligence.

You may also want to find out if RUBS (ratio utility billing system) can be applied in your area.

Its complicated here in CA too.

Best Way to Handle Utilities During ADU Construction?

Most Popular Reply