Tenant won't pay water bill. Any suggestions?

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Tenant won't pay water bill. Any suggestions?

Todd Moriarty
Investor · Macomb, MI · Member since 2016 · 121 posts · 8 votes

Hey all fellow landlords "in the trenches" with me in the Detroit area:

In the five years my tenant has been at my rental property, most of the time he has been $300-$600 behind in the water bill.  It's his responsibility to pay it in the lease.  He pays the rent and keeps it clean but is lazy about the water.  I've tried different tactics to motivate him.  I've contacted the city and requested they send him a shut-off notice as a scare tactic but specifically told the city NOT to turn off the water for fear of ethical backlash in court from the judge. This tactic worked in the beginning but then he called the city asking questions and they told him that I requested the shut-off notices and not to turn off the water.

Then I sent him 30 day eviction notices asking him to pay $200 towards the bill then I'd agree to not file the eviction with the court, if he paid.  Or if he didn't pay, I'd file it.  This approach has worked so far but I'm getting tired of sending him the notices. 

A couple years ago, I added an addendum to the lease asking for an extra $100 per month and I'd pay the water bill but he refused.

On the bright side, over the past 12 months, he has paid the bill and there is a $0 balance. Yay!  Maybe he robbed a bank recently. I thought he looked familiar in a FBI most wanted poster. LOL. A couple times recently he bragged to me that he's paying it.  As if he deserves extra credit for doing something he's supposed to be doing anyway.

However, I know he will get behind again in the future. Any future suggestions? What do you guys do?

Thanks,

Todd

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Robert Melcher
Residential Real Estate Broker · San Antonio, TX · Member since 2016 · 506 posts · 311 votes
10y

Our leases require them to have utilities in their name and active for the duration of the lease.

Any utility billing that comes to us after they take possession is added to their ledger and paid first from their incoming rent payments.

If the payment isn't enough to cover the rent too, then they are delinquent and subject to late fees and eviction filing.  

After a month, if they haven't put the utilities in their name, we notify them and take them out of ours.

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  • Robert Melcher
    Residential Real Estate Broker · San Antonio, TX · Member since 2016 · 506 posts · 311 votes
    10y

    Our leases require them to have utilities in their name and active for the duration of the lease.

    Any utility billing that comes to us after they take possession is added to their ledger and paid first from their incoming rent payments.

    If the payment isn't enough to cover the rent too, then they are delinquent and subject to late fees and eviction filing.  

    After a month, if they haven't put the utilities in their name, we notify them and take them out of ours.

    4Reply
  • Gloria Mirza
    Real Estate Agent · San Jose, CA · Member since 2015 · 172 posts · 66 votes
    10y

    @Robert Melcher I really like that idea a lot!  I'm going to start adding that to my leases.  I have had tenants that are late in paying utilities without much recourse against them, other than eviction.  Your idea makes a lot of sense. 

    0Reply
  • Account Closed
    Investor · Henderson, NC · Member since 2016 · 484 posts · 208 votes
    10y

    I think next time it's time to finally file that eviction and find a new tenant who can pay.

    1Reply
  • Beth L.
    Investor · Hagerstown, MD · Member since 2014 · 299 posts · 140 votes
    10y

    @Todd Moriarty where I live you can't put the water in the tenants name. It must stay in the owners name. You could always take an average of the water bill and raise the rent to include it. In this way too, they are accountable for their rent not utilities.

    2Reply
  • Stone Teran
    Investor · Cincinnati, OH · Member since 2015 · 374 posts · 120 votes
    10y

    Whose name is the water in?  If yours, shame on you and change it.  If his, let him not pay and let the water get turned off.  I've never seen an eviction case dismissed because the tenant didn't pay his own utilities.

    1Reply
  • Byron Bohlsen
    Investor · Minneapolis, MN · Member since 2015 · 173 posts · 53 votes
    10y

    Check your local laws... around here the water bill can be sent directly to the tenant but unpaid water bills get tied to the property as an assessment regardless of who is paying so you are ultimately responsible

    1Reply
  • Todd Moriarty
    OP
    Investor · Macomb, MI · Member since 2016 · 121 posts · 8 votes
    10y

    In Michigan, the water stays in the homeowner's name. All other utilities stay with the tenant.

    I wish I could change it to his, otherwise I would have long ago.

    0Reply
  • Todd Moriarty
    OP
    Investor · Macomb, MI · Member since 2016 · 121 posts · 8 votes
    10y

    The water bills do go to the tenant's address, but if they don't get paid, I'm ultimately responsible and it'll get added to my tax bill.

    0Reply
  • Tyisha G.
    Long Island, NY · Member since 2015 · 138 posts · 20 votes
    10y

    @Robert Melcher, that sounds like beneficial advice and I must incorporate that when I become a landlord. It is always great to have everything in writing from the beginning, that way all parties are clear about expectations and responsibilities from the start. Way to minimize stress and headache! @Beth L. that also sounds like a notable way to try. 

    Thanks for sharing.

    0Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    10y

    If I understand correctly the tenant has paid the water on time for 12 months and you want to know what to do if he is late again.

    My opinion is that 12 months allows him to be back in your good books therefore you should start at the beginning if he is late again.

    If he is late again send him a notice to pay and that any repeat late payment in the next 12 months will result in a eviction. If he is late again within the next 12 months evict him. Assuming of course that you legally have the right to evict for late water payments.

    0Reply
  • Joe Semifero
    Engineer / Program Manager / RE Investor · Dexter, MI · Member since 2015 · 86 posts · 30 votes
    10y

    Most leases have a clause that states that there are other items that get paid first prior to rent when there are other items owing, such as utilities, legal fees, late fees, etc. I would also say that it is not a "Michigan" requirement for utilities to be in the owner's name, but municipalities often put this policy or ordinance in place as it can be very difficult to collect from a tenant.

    At first I thought you should have the bill sent to you, but it sounds like you do want him to pay it and not have to bill him for it. Can the municipality send you the bill if it is not paid? How did you find out about the unpaid bill previously?

    I think the only option you have is to pay the bill, send notice of the water bill and request it be included in the rent payment, and then send a 7 day notice to pay to the tenant the next time they pay the rent if the additional payment is not included, because the payment would first be allocated to the water bill (per the lease) and then to rent, so the rent would not be paid in full.  Then obviously you would have to file with the court after 7 days, etc., if the payment didn't happen. 

    Based on the record the past 12 months, it sounds like it may not be a concern. Hopefully you are getting a good rent from this tenant for the extra work and hassle. If you weren't particularly fond of the tenant and thought they could be replaced, I would increase the rent the next time the lease was up to make it "worth your while." Also, I would proceed quickly with the eviction if the water bill is not paid and you have to file. If he stops paying the water again it may be an early sign of other problems. 

    Good luck!!!

    0Reply
  • Franklin Romine
    Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
    10y

    @Todd Moriarty Stay focus and keep  the momentum. I work at staying upbeat during periods of ugly periods of land-lording.  The law of averages tells us the more action and responsibly we take on, the better we will become.


    Franklin

    0Reply
  • James Ross
    Involved In Real Estate · Harsens Island, MI · Member since 2011 · 36 posts · 17 votes
    10y
    Who's in charge of your rental? The tenant or you? Get a new lease for him to sign if he doesn't then give him a 30 day and move on. Learn the lesson and just raise the rent to reflect the water bill next time. I stopped chasing water bills awhile ago and just add it in the lease. I market a house for 900 month and 50-75 for water on the lease it will say 975 a month.
    2Reply
  • Todd Moriarty
    OP
    Investor · Macomb, MI · Member since 2016 · 121 posts · 8 votes
    10y

    Thanks for the replies everyone.

    0Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    10y

    I apply payments to oldest balances first. So if rent is due on the 1st and the water comes in on the 7th, then the first payment gets applied to the rent and the next payment goes to the water bill.  Easy-peasy.

    Podcast Guest on Show #29
    0Reply
  • Sidel Murray
    Rental Property Investor · Eastpointe, MI · Member since 2014 · 11 posts · 10 votes
    10y
    Not sure if you rent in the city of Detroit or the burbs but in Detroit you can have your tenant complete a water affidavit. This protects you from being stuck with your tenants water debt. It is imperative to complete this form because the water department will not turn the water off as long as the property is occupied even if the bill is sky high. The affidavit is a simple to complete form that you can get from the water department. The info needed from your tenant is their ssn, drivers license number, employee info among other things. There is also a $112 deposit needed from the tenant. I have my tenants complete this form when the lease is signed. The paperwork has to be notarized as well. This paperwork has saved me hundreds of dollars.
    2Reply
  • Frank Dimino
    Rental Property Investor · Rochester, NY · Member since 2014 · 55 posts · 21 votes
    10y

    raise the rent to cover the normal water bill. Tenant may leave if you do that though. You need to decide if him not paying water but being good otherwise if you want to keep him.

    0Reply
  • Daria B.
    Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
    10y
    Originally posted by @Beth L.:

    @Todd Moriarty where I live you can't put the water in the tenants name. It must stay in the owners name. You could always take an average of the water bill and raise the rent to include it. In this way too, they are accountable for their rent not utilities.

    Hi Beth-

    Where in MD is this enforced? I have rental in Baltimore County and all tenants have the utilities in their name prior to moving in.

    Maybe I'm mixing up what part of the utilities as I do pay sewer that is on my tax bill. But the tenant had a direct responsibility for electric/gas. 

    0Reply
  • Richard Balsam
    Investor · Alpharetta, GA · Member since 2015 · 242 posts · 185 votes
    10y

    Here in Georgia tenants pay for utilities in their name. I've had situations where tenants kept off the air conditioning during our hot humid summers, and some have shut the heat off during the brief but cold winters - when traveling during the holidays, or another for a business trip while living alone. Had evicted one family to discover green mold behind all the downstairs baseboards - due to humid air being trapped behind the moldings. Why? Air conditioning acts like a dehumidifier - drying and circulating the air throughout the house. 

    Had another home that shut off the heat in winter while traveling. He moved out and turned off the utilities. When we took back the home (after a few 20 degree nights the month before) had 6 pipes burst when we turned the water on. Some in tough locations ( behind the shower tile, etc). That was a tough day...

    We now have provisions in out leases - that all utilities are to remain on and in use during winter and summer months. If any tenant is not using the air conditioner or heater during temps that are below 32 or above 80 degrees - they will be sent a demand notice to use them immediately or be subject to eviction. Reason being: the homes are still titled in our company name - that is why they are renters. They may be causing damage to the home by not using the utilities - even if they must turn on the utilities low - this is preferable to burst pipes, or mold growing in our houses due to trying to save some money - which will cost us plenty to repair the pipes and drywall due to their "neglect". We have a provision to inspect the property at least once per year or if we suspect anything (for example: neighbor calls regarding drug being sold...happened in a different house). 

    I also check during the year with a repair call -to see if the air filter is being changed. If not- they are also handed a demand letter and we will check one week later to make certain this is done correctly. Why? Had a home that never changed the filter- in years. The coil froze up - the wife was blaming me - after they lived in the house for years. Turns out- the filter had a thinker layer of dust- than the filter's own thickness! $1,800 later - and after an all day long repair in the attic- coil was replaced - in temps over 100 degrees that week...

    How to tell if utilities are being used? Hear the air conditioner during summer - it cycles on and off - just wait. Gas has a meter on the side of the house - is the meter spinning? 

    0Reply
  • Todd Moriarty
    OP
    Investor · Macomb, MI · Member since 2016 · 121 posts · 8 votes
    10y

    I like the idea someone had earlier of putting a clause in the lease or adding an addendum saying that unpaid water bill will be paid by the landlord using rent money. If the next water bill is about to come out, and the previous bill still has not been paid, then rent money will be applied to the water bill, paid by the landlord. And because there is a rent money shortage, tenant is short rent, then I will send a 7-day eviction notice and late fees will apply.

    I check the city utility billing online every 3 months to check the bill status.

    One question I have is the legality of this approach. Here in Michigan, 7 day eviction notices can be given only for non-payment of rent. Can I use rent money towards the bill then give a 7 day notice. I guess I can if I put it in the lease. 

    0Reply
  • Beth L.
    Investor · Hagerstown, MD · Member since 2014 · 299 posts · 140 votes
    10y

    @Daria B. I am speaking of my properties here in Hagerstown. They have city water, but are outside city limits, in Washington County, so maybe Baltimore County just has different rules. The tenants can get all other utilities in their name but the water must stay in the owner's name. Around here the landlords either average the water and include it in the rent or they pay the water bill and forward that charge to the tenants to be included with their next rent payment.

    0Reply
  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    Where utility is in the name of the owner, but paid by the tenant - - lookout for a LIEN against the property.  If found, serve 3-day Pay or Quit, claim lien amount as damages,

    but I'm no lawyer so verify with yours.

    0Reply
  • Sanjay Patel
    Investor · Rockville, MD · Member since 2015 · 24 posts · 8 votes
    10y

    RE: state of MD - we got tired of bum tenants skipping out and leaving us holding the bag on a big water bill , so we just have the water bill in our (landlord) name and collect a monthly fee from the tenant, that avgs the anticipated amt they would pay for the quarterly water bill. then when th bill comes in each quarter we settle up. Kind of a pain but at least we wont get stuck with the full water bill.

    1Reply
  • Daria B.
    Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
    10y

    @Beth L.

    Good to know.

    0Reply
  • Joe Semifero
    Engineer / Program Manager / RE Investor · Dexter, MI · Member since 2015 · 86 posts · 30 votes
    10y

    Yes, it's legal in Michigan. I didn't make this part of my lease up - it was included in a standard Century 21 lease our RE agent used for our first few rentals. We also had our lawyer review the lease and ok it. 

    The "rent payments" are not rent payments, they are payments for all amounts owed. The lease simply says the priority for payment of items, and rent comes last.  

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