Tenant isn’t paying utilities even though lease requires it

13 Replies

I recently bought a duplex (first investment property) that has a tenant under contract until the end of March 2020. The lease states that the tenant pays all utilities. The previous management had the sewage in their name. The sewage isn’t metered for the duplex, so it’s billed as one with a fixed rate. That’s why it can’t easily be put in the tenant’s name and it is currently in my name. For the first sewage bill, I marked up and emailed a copy on the 15th showing that the tenant owes me half on the 1st the following month. The tenant paid rent, but is now 6 days late on the sewage. The lease states that if they fail to pay utilities that is in the management’s name then management can disconnect service without notice. There’s nothing about fees on unpaid utilities. Tenant hasn’t responded to multiple emails. How would you handle this?

Thanks in advance for your input.

As was mentioned above, I pay for the water and sewer for most of my properties, because in most areas, if the tenant doesn't pay them, the bill will be assessed to the property taxes.  I figure the average cost into the rent.

As to your comment about disconnecting utilities, every state I have looked into make it a criminal offense if you turn off any utilities, even if the tenant isn't paying you for them.  If it is in the lease that they have to pay them, and they don't pay, then you file a lease violation eviction against the tenant.  If you turn them off, the tenant can sue you in most states, and it will cost you a lot more than what the tenant didn't pay you.

PPR Note Company
Note Investing
Diversify your portfolio and get completely passive cashflow.
All without tenants, repairs, or vacancies - in a real-estate-backed investment fund.
Here's how.

How much money are you talking about? If it's half a sewer bill it doesn't sound like it would be that much, it may cost you more to get another tenant in the house if the landlord tenant relationship gets damaged. Have you had a discussion about the bill with the tenant? Part of being a SFH landlord is managing people

@Brian R.

Thanks. I’ll look into the laws for Indiana. The sewage is through a private company, so I don’t think that it would be added to my tax bill. What’s interesting is that the sewage company sold its water utility “system”, so now they have no control over the water. I’m not sure how they would “disconnect” the unmetered sewage then. I think normally they would just turn off the water and that wouldn’t allow you to flush.

I plan on giving the previous management company a call tomorrow to see how they handled this. I know when I called around the time of closing, they mentioned that the tenant owed them one month’s worth of the sewage bill.

I appreciate your response and thoughtful input!

@Meg Kay

It’s fixed at $43.09 per unit, so $86.19 total. The tenant has paid rent and been there about 4 years now. I don’t want to damage the relationship, but I also want to be reasonably firm on what the signed agreement is.

It would definitely be more costly to get them out and get someone else in there. My communication has been through email with no response. I drove by today, but tenant wasn’t home. I’m going to call the previous management company tomorrow to see how what the tenant is accustomed to.

@Blake Cromer well it’s in your name so that’s your bill. In the future I’d just take it out of your name unless there’s some law that requires it to stay in the landlords name. If they don’t want to pay for it, then they don’t use it.

I have tenants who don’t pay for gas (as in they turn it off). That’s their choice.

I always check to make sure utilities run with the person while bill it is, and not the property. Then if they don’t pay it, it’s not your problem.

Also you’ll learn quickly that just because it’s in your lease, doesn’t mean you can enforce it. Are you going to evict over a 20-30 dollar bill? I guess you could but you’ll just lose more money, doing that.

I don't know if this is in your lease and, if not, perhaps something to add for the future.

For my personal duplex with a shared water line/sewer bill, I have a stipulation in my lease that late fees, utility bills, and tenant-caused damage is paid for first and then remaining monies are applied to rent.  That way, if a tenant is short.  They are specifically short on rent.  With all the normal landlord/tenant laws for unpaid rent at my disposal.

@Caleb Heimsoth

It’s in my name because the duplex isn’t metered. The utility company bills it as one unit at a fixed rate instead separate units. I called the two previous management companies today and both said that they billed it back to the tenant like I am trying to do. The tenant still owes the previous management company one month of sewage.

Going forward, it needs to just be calculated into the rent. One solution I thought of for now is to deduct the sewage cost from the tenant’s security deposit.

Smarter rental management
Outperform your peers by 71%
NestEgg landlords save $6,960/yr in fees & 20 hrs/mo*. Self-manage for free or go hands-off for $29.
Start now, get $500

dividing utilities like that might be an issue.  options are evicting: loose 30days of rent, utility bill, and other costs.... or learn your lesson.  If they are late on the bill for the previous management, why would you think that they would be on time/even pay for you?