Utilities switched before closing on the properties?

Question

We are closing on two properties next week.  The owner has just informed us "they" turned the utilities off and wanted to know if we wanted to have them turned on in our name.  Is this normal to have the utilities switched over before the closing day?!?  IMO I feel that we should wait till the closing is complete and the properties are officially in our name.  For the seasoned investor, is this a normal situation to have?  Also the temps will be in the low teens and 20s this weekend with a chance of snow.  It could be dangerous to let the house get down to those temps.  Pipes could freeze!  What would you do in this situation?

Account Closed · Answer

In my contract the seller is responsible for the utilities until closing, and responsible to maintain the property in its current condition until closing.  Obviously if the pipes burst he's responsible.  However, if you put the utilities in your name, now I start to wonder who's responsibility it is.

The fact that you might have business dealings with this person in the future makes it even more important that you draw a line.  It looks to me like you didn't draw any line.  And therefore, the next negotiation you have with him will be even more difficult.

The fact is that the pipes are his responsibility, and therefore, if he turns the utilities off it's his risk, not  yours.  If something happens to the house because of no utilities I would not close if I were you.  Let's face it, he could have just as easily set up a shut off to coincide with the closing, which is what he should have done.

Elizabeth Colegrove · Answer

@Ryan Billingsley

Do you have an agent or are you doing this yourself? Either way I would tell the seller that in no uncertain measures they are responsible for the utilities and condition of house till the day it closes! If anything happens, "burst" pipes you will hold closing till they are solved :) That is if you want to take the hard stance. If you don't care than I would put them in your name.

I have done 9 closings and never had a single one in my name till after closing.

Ryan Billingsley · Answer

Account Closed I agree!  I was tempted to let the property sit with the gas off.  The owner has the tenants turn everything on in their name so when they move out it all gets shut off.  That is why it just shutoff.  I would think he would have it turned on till closing since its his responsible.  We did not have in our contract anything about the utilities.  We will next time.

Ryan Billingsley · Answer

@Walt Payne   So I just talked to the property owner and got him to take care of it.  I explained that we are not responsible until we close and he understood.  He was so caught up in deer hunting this weekend he was not thinking clearly.  Haha!

Walt Payne · Answer

@Ryan Billingsley  You don't need anything mentioned about utilities, as long as you have a contract that states that responsibility for the condition of the property remains with the seller until closing, which is a standard clause. The reason for doing it that way is that if weather is not a factor, or winterizing is performed, then utilities do not need to be turned on. But the seller must deliver the property in the same condition as it was shown to you.

I agree with @Jim Piper that if this is to be an ongoing relationship it is especially important that you make a stand and not allow this person to dictate unreasonable terms to you. If your sales contract says that he is responsible for the condition of the property, hold him to it!

Ryan Billingsley · Answer

@Elizabeth  Colegrove

Thanks for the advice!

Elizabeth Colegrove · Answer

@Ryan Billingsley

I would than say, we are happy to turn on the utilities but are taking no responsibility of the condition of the house till closing :) This way your covered incase your pipes freeze!

Ryan Billingsley · Answer

@Elizabeth  Colegrove

The owner is a investor as well.  We might be needing his services in the future as he is also a contractor.  The property needs the gas turned on tomorrow and we close next Thursday.  We plan to go ahead and turn it on.  The weather will be to cold to leave it off and the owner will be out of town for a couple days deer hunting.

Utilities switched before closing on the properties?

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