Delinquent water bill from evicted tenants - what do you do?

10 Replies

Hey guys.

I've been in the business for about 7+ years - and am looking at trying something new for water bills with my tenants.

The best thing is with the City of Detroit. They have a water affidavit that puts the water bill in the renters name not the owner of the property.

Unfortunately not every city has that - and large water bills have been adding up, and in some cases when the tenant leaves, gets put on the taxes.

Just looking to see what other property owners are doing - to protect themselves for getting stuck with the water bill.

I have thought about increasing rents to include water, and taking control of water payments myself, but that puts the tenant in a position to not be concerned about conserving water.

What do you do? And what have you learned/has success with?

I appreciate the help!

As long as the lease states "tenant is responsible for all utilities" or something to that line of reasoning, the local legal system should hold them accountable if you can prove they didn't pay it. 

Whether they pay it or not, even if you win when taking them to court, is a different matter. (Had this happen to me once and tenant still haven't paid up 2yrs after winning judgment.) 

I have them initial the section of the lease that says "tenant is responsible for all utilities" and if not converted into their name within 30 days after move in date, it is grounds for eviction. Seems to work well. 

I pay the water bill, then bill the tenants. This way I know that it is paid. 

I pay the water bill myself, then bill the tenants.  I have ways of doing this:

a) Tenants get the bill every 3 months and pay it off.

b) Tenants pay $25 - $50 every month toward the water bill then every 3 months when it comes send them a reconciliation statement.  If they owe money, they just have to pay the difference in their payments.

c) I have $150 per quarter toward water included in the rent and if the tenant goes over that, they have to pay the difference.

Getting one larger bill every 3 months is sometimes difficult for tenants.

I have several rental properties and unfortunately, Many cities have draconian rules that simply make your life miserable because you will get stuck with the bill and if tenants leave and don't pay, then city will place a lien on your property and/or would not be able to reconnect water. You can either put it under your name but charge it on top of the rent to each tenant,only keep one water meter connected (instead of multiple ones on same property) and pay it your self and charge higher rent in lieu of that and last, i saw once someone that have some kind of water meter clock connected on the line and can see how many gallons they spent per month, but then you would have to calculate each month the price per gallons consumed,etc. Which i think is a hassle.I simply charge them higher and get it over with.

@Account Closed  many cities require the owner to pay if the tenant does not for any reason. I track on a spreadsheet the units used (not dollar amount) for each bill so if theres a jump we can get whatever fixed. We now pay all the water bills as new tenant has to take a copy of their lease and pay stubs and all kinds of crap just to transfer water, so its just included in the rent, so switching back when they move out, and ultimately we have to pay if they dont anyways. 

For multi units I pay water and favor that cost into the rents. Philly makes it difficult to separately meter water within the same building.

For SFRs I pay the water and require the tenant to reimburse me for the exact amount.

In philly the water bills are in the property owner's name. Only gas and electric can be directly billed to tenants.

For units were we're ultimately responsible for the water & sewer bill, we include in the rent **up to a certain amount**, anything beyond that is billed to tenant as added rent for the following month. It's been running good that way for years now. No surprises of big water bills the tenant didn't pay that we now have to pay.

Originally posted by @Jeremy Tillotson :

@Account Closed  many cities require the owner to pay if the tenant does not for any reason. I track on a spreadsheet the units used (not dollar amount) for each bill so if theres a jump we can get whatever fixed. We now pay all the water bills as new tenant has to take a copy of their lease and pay stubs and all kinds of crap just to transfer water, so its just included in the rent, so switching back when they move out, and ultimately we have to pay if they dont anyways. 

 This sounds like the best way to do it. Things have grown pretty quick for me, where I don't manage them myself anymore, and my PM is having trouble with it as well.

Thanks for the help Matt!

@Jeremy Tillotson  that's one way to go, but from a behavioral economics standpoint, the tenant has no reinforcement to conserve water. Plus, if they stop paying rent, you're still paying their water bill for 2-3 months during eviction. 

We state in the lease they must do water switchovers in 30 days or less. I implemented this strategy after getting hosed for $1500 water bill b/c: 1) tenant knew water company wouldn't turn off the water (they amended this strategy in 2014) and 2) property manager wasn't following up with all payments.

If you're a Detroit investor, call DWSD's landlord unit, and they can email you the forms so you can give tenants hardcopies the day they sign the lease. This way, tenants can speed through the DWSD hassles as fast as possible. My property manager makes it crystal clear we will evict if this is not done, so it hasn't been a problem of late. If memory serves, the last tenant dropped paperwork off early so it was in their name the first day of the lease.

cc: @Dan Gheesling  

In our SFRs, if a tenant doesn't pay the water/sewer bill, we will ultimately have to, or face a lien on the property. However, I take our name off an account once we have a tenant, and the tenant is then responsible for the bills. What that actually means is, if the account is in the tenant's name, the city can and will shut off the water for non-payment. 

If the account were to stay in my name, and I bill the tenant and they don't pay, I cannot have the water shut off. So essentially the tenant is self-policing, because they know if they don't pay (and want to stay there), they will get shut off. And it's on their dime if they abuse the usage.

Water/sewer is billed quarterly. If a tenant is being evicted, they will simply not pay the bill, knowing by the time they're evicted, the city likely won't shut off the water - unless they're already way behind. Ask me how I know ;)

I can always call the water company and check if there's a balance, and I've done that.

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