1 Furnace in 2 Tenant Duplex

20 Replies

Hey guys, 

I have a upper/lower Duplex that only has 1 furnace. It's setup right now so the tenants each have their own Gas bill in their name, but one of the tenant's bills is considerably higher than the others. 

The tenant in the bottom unit poorly manages the furnace, leaving it on almost at all times. He's accumulated quite a large bill because of this. 

The house was originally a SFH, but it was converted into a Duplex before I bought it. Each tenant has their own Hot Water Heater, but 1 Furnace heats the entire house. The lower unit, which controls the furnace, is around 950sqft and the upper unit is around 450sqft.

The bottom unit tenant is challenging me, demanding I reimburse him for the heat which is going towards the 2nd floor. He's withholding rent right now saying I need to cover half his bill since his heating costs are going towards the upper unit. 

I'm curious to know what's the right thing to do in this situation...

I've explained to the Bottom tenant he has the luxury of controlling the temperature of the house. The upper tenant has complained to me multiple times about it being too hot in his unit because the bottom tenant does not actively manage the thermostat. He leaves the heat on 'all the time', even when he's not home or in the warmer months of summer. 

Now the bottom tenant is withholding rent until I 'pay him half his bill' because he's paying for the upper unit's heat. 

What do you think I should do in this situation?

You can install electric baseboard heater for the 2nd unit and they will have their own heating source.

Originally posted by @Matthew John :

Hey guys, 

I have a upper/lower Duplex that only has 1 furnace. It's setup right now so the tenants each have their own Gas bill in their name, but one of the tenant's bills is considerably higher than the others. 

The tenant in the bottom unit poorly manages the furnace, leaving it on almost at all times. He's accumulated quite a large bill because of this. 

The house was originally a SFH, but it was converted into a Duplex before I bought it. Each tenant has their own Hot Water Heater, but 1 Furnace heats the entire house. The lower unit, which controls the furnace, is around 950sqft and the upper unit is around 450sqft.

The bottom unit tenant is challenging me, demanding I reimburse him for the heat which is going towards the 2nd floor. He's withholding rent right now saying I need to cover half his bill since his heating costs are going towards the upper unit. 

I'm curious to know what's the right thing to do in this situation...

I've explained to the Bottom tenant he has the luxury of controlling the temperature of the house. The upper tenant has complained to me multiple times about it being too hot in his unit because the bottom tenant does not actively manage the thermostat. He leaves the heat on 'all the time', even when he's not home or in the warmer months of summer. 

Now the bottom tenant is withholding rent until I 'pay him half his bill' because he's paying for the upper unit's heat. 

What do you think I should do in this situation?

 I'm lost. Sounds like you've way over-complicated this. I am guessing you told both tenants that their rent was like $650 + $50 for heat. Next time just go ahead & tell the tenants the rent is $700 & heat is included. Save yourself a lot of back & fourth about whatever it is that they're arguing about.

Originally posted by @James Wise :
Originally posted by @Matthew John:

Hey guys, 

I have a upper/lower Duplex that only has 1 furnace. It's setup right now so the tenants each have their own Gas bill in their name, but one of the tenant's bills is considerably higher than the others. 

The tenant in the bottom unit poorly manages the furnace, leaving it on almost at all times. He's accumulated quite a large bill because of this. 

The house was originally a SFH, but it was converted into a Duplex before I bought it. Each tenant has their own Hot Water Heater, but 1 Furnace heats the entire house. The lower unit, which controls the furnace, is around 950sqft and the upper unit is around 450sqft.

The bottom unit tenant is challenging me, demanding I reimburse him for the heat which is going towards the 2nd floor. He's withholding rent right now saying I need to cover half his bill since his heating costs are going towards the upper unit. 

I'm curious to know what's the right thing to do in this situation...

I've explained to the Bottom tenant he has the luxury of controlling the temperature of the house. The upper tenant has complained to me multiple times about it being too hot in his unit because the bottom tenant does not actively manage the thermostat. He leaves the heat on 'all the time', even when he's not home or in the warmer months of summer. 

Now the bottom tenant is withholding rent until I 'pay him half his bill' because he's paying for the upper unit's heat. 

What do you think I should do in this situation?

 I'm lost. Sounds like you've way over-complicated this. I am guessing you told both tenants that their rent was like $650 + $50 for heat. Next time just go ahead & tell the tenants the rent is $700 & heat is included. Save yourself a lot of back & fourth about whatever it is that they're arguing about.

 Agreed. When you have a common utility there's really only two honest ways of dealing with the usage: either pay the bill yourself and include the cost into the rent (based on some semblance of what the utility costs/what it should cost) or submeter the utility (not usually done on gas). If you don't want to separate the heating - which is what I would do - then just include it in the rent and charge accordingly on the front end. If these are monthly customers this should be relatively simple. There's actually a benefit to the renter in that you get to equalize the costs - i.e. heat might cost $300/month in the winter but $5/month in the summer just for having the gas on. You charge $50/month into the rent and the tenant has cost certainty. You just have to make sure you have a good handle on how much you should be recovering. 

You could have removed this potential problem by clearly disclosing the situation up front. If downstairs tenant has control and the bill is too high, that's his fault. If the tenant upstairs is too hot, have him crack some windows. 

Why type of heat is it? If you have hot water baseboard, you could set each level on their own zone so they at least have their own thermostat.

@Matthew John I have a duplex with 1 furnace (gas) for both units as well. I solve this problem by including heat in the rent and they pay for their own hot water and electric bill. As many have suggested it really is the best way to handle this situation. If your tenants are month to month I would re-write your lease and switch the heat into your name and charge $50 extra a month per unit and include heat. 

It looks like you are in a crappy situation, because you have been allowing one tenant to subsidize another tenants heat. In no way is that ok, and the tenant is 100% justified in being upset. Now is a great time to do some research to see how your local landlord tenant laws view this. A lawyer may be necessary to untangle this issue, as this is not a one time fix, since the current leases stipulate that they pay for their own utilities.

@Matthew John Long term I would install electric baseboard heat in the small 2nd floor apartment. Since the apartment is so small you won't get any pushback.

@Alex S. good idea, but how would that prevent the furnace from pushing heat up to the top unit? Maybe I’d have to call an HVAC contractor to block off vents going upstairs.

@James Wise  

The downstairs tenant is paying $950/m. I pay water, they pay gas and electric. Upstairs tenant is paying $600/m.

They each have their own gas bill, but the bottom unit is the one paying for the furnace use which ultimately heats both units.

I don’t want to pay their gas bill because the downstairs tenant does not manage the furnace and just leaves it at 70° all winter/summer, even after he’s told to actively manage the thermostat so he can reduce costs.

Just trying to find the solution. He’s been a tenant for 8 months, just resigned a 1 year lease and this is the first time he’s started complaining asking the me to cover half his bill.

@Nathan G. it’s a gas furnace. This was disclosed up front. He was very much aware there is only 1 furnace for the entire house and he has full control over it. I told him that was a perk to his unit.

He’s been a tenant for 8 months and this wasn’t ever an issue. Now he got a bill from Feb - May and he’s not happy with how much he owes so he wants me to reimburse him for half of it.

The problem is he’s reckless with the heat. He was under the impression if he’s not home, he’s not using the heat. He just has it set to 70° the entire time, so it pretty much runs all the time since we’re in Michigan.

He’s on his 2nd month of a 12 month lease now and he started having these issues. I figure at this point it’s best to talk to HVAC professional and see if we can lock the furnace down to bottom unit only and install baseboard heat upstairs.

@Michael Doherty Based on the usage the tenants have on their consumers bill, that would add about $150/m extra to me. I’m sure they’d be more reckless with the furnace if I had to pay, too. That totally crushes my cash flow so I don’t really like that idea.

@Andrew B. Indeed! I’ve already scheduled a meeting with my lawyer, but wanted to get BP’s opinion!

@Michael Noto I like the idea, how would I block off the furnace so it only goes to the bottom unit then?

@Matthew John If I understand correctly, he just signed a second one-year lease? So he's lived there for over a year and is just now complaining?

Tell him to suck it up. This isn't news. You probably had a really cold month (that happens in winter) and he wasn't careful with his utility use. He controls the furnace, not you or the neighbor. 

Originally posted by @Matthew John :

@James Wise  

The downstairs tenant is paying $950/m. I pay water, they pay gas and electric. Upstairs tenant is paying $600/m.

They each have their own gas bill, but the bottom unit is the one paying for the furnace use which ultimately heats both units.

I don’t want to pay their gas bill because the downstairs tenant does not manage the furnace and just leaves it at 70° all winter/summer, even after he’s told to actively manage the thermostat so he can reduce costs.

Just trying to find the solution. He’s been a tenant for 8 months, just resigned a 1 year lease and this is the first time he’s started complaining asking the me to cover half his bill.

 Well you've decided to buy a multi with a shared utility. So at this point you've only got 3 options.

  1. You pay the gas bill. Your a the landlord. This is part of the biz when you've got a multi unit with shared utilities. - Best option.
  2. You install a 2nd heating system & separate out the existing one so each tenant has separate utilities - 2nd bast option. Kinda pricey though.
  3. You keep going through the same sequence of events with most all of your tenants during your ownership of this property. If one does put rent in escrow you will probably loose that case as it's illegal in all jurisdictions that I know to force a tenant to pay for a common utility. - Worst option.

Bonus option

You sell the property & only purchase a property with individual utilities going forward. Not sure if this would be good or bad for you as I don't know how you'll do on the sale. Maybe you're huge in the green, maybe not.

@Matthew John

In my opinion and experience, you should be footing the bill for the heat. And who in their right mind (downstairs tenant) would agree to pay for the heat for someone else’s unit?

Electric heat for 2nd floor is the way to go.

@Matthew John in the short term I would start paying the bill. If it's legal in your state use the Rubs system to bill the tenants for the gas they use based on the ratio of square footage and number of occupants. You might have to wait until your lease is up to write a new lease allowing you to do this.

Another option would be to raise the rent and include the gas. If you do this set the thermostat yourself and put a lock box over it so the tenants can't turn it up too high or down too low.

I also like the idea of closing off the duct work to the upstairs apartment and adding electric baseboard heat, this might cost you a few hundred bucks.

This is why when I buy a duplex that is not split, I split them. I am splitting one right now. I had to split electricity, HVAC, and hot water tanks. It's a pain, but once it's done you never have to worry about craziness like this.

@Matthew John

Check your local LL/T laws, but I know in my state it’s illegal to have one tenant foot the bill for a common utility like you are doing. I would suck it up as a lesson learned, resolve the current situation with the tenant (which probably means you pay $ to shut them up) to avoid further legal troubles, and have the heat immediately separated in whatever way makes sense for this property.

Thanks all for the replies. 

I spoke with a lawyer today about the situation. The tenant complaining was aware of the 1 furnace in the property and he knew he had complete control over it. He's also lived in the property now for 8 months. 

The lawyer said this is not a legal problem, but a business problem. He suggested to raise the rent (it's already slightly higher than market) and pay the entire bill myself. If I did this, I would be losing around $100 - $125 in cash flow per month, with the potential to lose more because of how reckless the tenant is with the heat. 

The tenant has no legal case here, but at the same time I don't want him trying to strong arm me or withholding rent. 

The property has split utilities. They each have their own hot water tank. The only thing shared is the furnace and the cost of installing a furnace for the upper unit (under 450 sqft) is not worth it. It might be worth it to hire an HVAC professional to close off the ducts to the upper unit and get a couple baseboard heater for the top floor (as suggested here), but I really need to weigh the costs here. 

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