Tenants that didn't sign the lease

[Jason Milko]

I am currently in the process of renewing leases for both of my tenants in an up/down duplex. The current leases have the tenant paying me monthly for utilities, and I have been charging them based on RUBS.  I am switching this to a fixed monthly fee so that charging and paying utilities can be more streamlined. I see no issues with switching to this strategy, as the monthly charges are based on the average of the past year. 

However, when my tenants were notified of this change, one of them suggested to me that they are currently paying too much in utilities because their neighbor has more people living in the unit than I was aware of. 

My question is: How can I verify this claim in a professional manner and without exposing my tenant as a rat? 

In the future, I think this can be prevented by not being as transparent with the utility charges, and simply charge one monthly rate without dividing it between base rent and utilities.

Thanks for the help!

[Richard F.]

Contact your Tenant and inform them you need to perform a brief, walk through renewal inspection, primarily checking for potential leaks or other issues, as a normal part of the renewal process. As you walk through, take note of the number of different sizes of shoes; number of toothbrushes; number of sleeping spaces; and note any mail or other items identifying people not authorized to be living there. Finally, simply ask one of the tenants to reconfirm how many total are living there. They will often tell you aunty and uncle are staying with us temporarily because... 

Just collect the information, do not start negotiating or giving deadlines etc. If they ask, advise you need to evaluate the current market before making any decisions. If your Rental Agreement has a clearly defined "guest" policy, for example 2 weeks maximum, "remind" them of that fact if they have confirmed someone is staying there already. 

Review the written terms of your Rental Agreement, and, assuming you found several indicators or based on Tenant statement, send a Notice of Violation of the terms of that agreement, and follow through per local law.

With regard to your plan for changing how you bill them, are the two spaces identical in size? Number of people certainly can be an issue, are all occupants signing (and minors named, but not signing) on each Agreement? Are the appliances comparable in size and age for each unit? No shared laundry? My point is, all of these do affect actual usage. "Average" utility costs are not accurate or fair. Be sure you know local law on this point, some do not allow Tenant billing calculations for shared utils.