Being Too Easy-Going on Your Tenants: A Case Study of What Not To Do


This post stems from a current issue we are facing in our business.  Let me elaborate:

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Case Study

We had a new tenant-buyer move into one of our mobile homes and land properties in June of this year.  The previous tenant-buyer could no longer afford to pay the rent, so we offered “Cash for Keys” to avoid going through the formal eviction process and the result was the home in better condition than the day we sold it.  However, there was a minor issue with the central A/C so we turned the electricity on so that our A/C guy could fix the issue.

If the electricity is still in our name on the day of closing (like it was in this case), we ask the tenant-buyer to put the electricity in their name within a week of moving in.

Fast forward to three months later and the electricity is still in our name.  We have been paying the electricity and then adding that amount to the tenant-buyer’s monthly rent payment.  I should add that they have been paying on time. It hasn’t harmed us financially but obviously we are not a utility company and would rather avoid this accounting headache.

Rental Agreement

In our rental agreement, it states that the lessor (us!) are not responsible for the electricity; however, this is a bit vague.  I have since added that if the electricity is turned on in our name, they have 5 business days from the date of closing to get the electricity transferred in their name or we’ll shut it off (be sure to check your state laws.)

We also do a better job of reinforcing this verbally now at the closings.

You may be thinking:  “Why don’t you just have the electricity turned off?”

My initial recommendation was to have it turned off within the first couple of weeks after closing.  My dad and business partner believed that we should give them a little more time.  We finally agreed that the latter was a better decision and here was our logic:

You have to know your tenant/buyer.  Ours have steady employment/income but have little in savings.  After this tenant-buyer had made a down payment to us, they had little left to make the deposit for the electricity and owed the electrical company a few hundred dollars in unpaid bills.  Without electricity, they weren’t going to stay in the home.  We also wanted to start the relationship on a positive note.

Looking back this definitely isn’t our problem and we should have been firmer.  The reality is that they didn’t do what they had agreed to do.

(**Quick detour:  Even though we probably chose the wrong decision in this case, there have been countless times where having differing opinions from each other has helped us evaluate the best decision.  And this isn’t just limited to partners.  BiggerPockets can be a great source of bouncing ideas off of your fellow investor.**)

Let’s Look at an Overview of This Situation:

  • We have learned our lesson which will prevent future mishaps like this from happening with a better lease and better verbal expectations.
  • We haven’t lost money, but we have lost time in keeping up with the current balance.

What to Do?

We had decided to tell the tenant-buyer that we are turning off the electricity one week from our notifying them and it would be in their best interest to have the electricity switched over into their name before this date.

The Result

The power was turned off on Monday and was not expected to be reconnected until Friday (they needed time to come up with the money to pay the electrical company and were using a generator in the meantime.)

They submitted their online rent payment on Thursday so it appears that they are going to stay.

How have you handled similar situations?

Photo Credit: aturkus

About Author

Aaron Kinney

Aaron Kinney has been investing in mobile home and land properties with his dad since 2011. He's been a full-time investor since mid-2014 and when he's not working on the business, he can be found reading, playing tennis, or going on adventures with his wife. He has some books and a blog that discuss various aspects of mobile home investing at his website and helps investors speed up the creation of paperwork here.


  1. I avoid trusting the tenants altogether and require tenants to call utility before they move in and have the utilities transferred to their name. Before I hand them keys, they have to provide the account/ confirmation number for the utility transfer, and I usually ask for it before we schedule the move-in time so I can call the utility myself and confirm the transfer to the tenant. when they move-out, I request they transfer it back to owner, so power doesn’t have to be turned off between tenants. Also, these written requirements are written into my signed deposit receipt outlining move-in dates, lease signing date, and utility transfer requirements in order to be permitted to move-in. No utilities, no keys. its that simple. Fellow BPers helped me implement this rule so I didn’t have to encounter headaches like this…

  2. This post was perfect for me. I’m going through a very similar situation right now. I purchased a duplex that was half rented. The rented half’s tenants had signed their lease in 2008 and had never had a rent increase. They were about 15% below market IF they paid all the utilities themselves. Water/sewer was included in their previous lease. Our leases state that the tenant is responsible for all utilities excluding trash.

    The new lease included a 7.5% increase in rent (I should have gone the full 15% all at once). I explained the lease to the tenant, they agreed and signed the lease. Three days later, they came to me and told me that they are tired of paying for bills, so here is the water bill to be paid. In Pennsylvania, water/sewer bills are lienable on the property, so I have been paying the bills, and we’ve been going back and forth now for three months.

    I tried a variety of ways to meet them in the middle, each of which they refused. Two weeks ago, I hand delivered a ‘friendly’ letter which outlined the parts of the lease they were defaulting on asked that they propose a schedule to pay off the water bills. They never replied, so I hand delivered a ‘stern’ letter in which I laid out the schedule to pay off the water bills.

    Long and short of it, I’ve been too nice. I was tentative about sending a notice to quit, but will be doing so when their payments are late/non-existent. Fair and stern are uncomfortable to master, but must be mastered or landlords/property owners/managers will blow a gasket. (I know I’m about to). Thanks for the post.

  3. I always require the utilities in their name before they get keys. I have landlord agreements in place with most utilities so they automatically transfer to me when they move out and remember to have their utilities shut off. But then again I insist on proof of utilities in the tenants name prior to turning over the keys.

  4. First rental of ours, we let the tenant keep the utilities on from Friday till Monday as the lease was signed late Thursday. I checked with utilities on Tuesday, not changed yet. I sent the tenant a polite text saying that we would be shutting off the utilities on Friday morning. They responded “Okay”. Everything went well, but we did pay for extra utilities for a week!. We close on 2 more houses this next week, so we will not be so lenient in the future. I like the idea of either telling the utilities will be off the day after signing or they should bring proof they have been switched… Thanks

  5. I guess I’d be hesitant to start with the fact the guy owed the electric company money and couldn’t get current.
    BTW how much did he owe that it was cheaper to get a generator???

    Fyi I always call to have the utilities off within the first 2-3 days.
    No warning since they know.
    I’d say about 95% of the time they say it has already been changed.
    Once they said it was scheduled for like 3 days later. Wasn’t worth the hassle to get them to move it up for 3 days of electricity.
    (BTW only eviction to date)

  6. For rentals we have a written friendly list of requirements to be done before lease signing utility name switch is included I call utility companies to confirm name switch the day before lease signing. Bottom line keys are not given to new tenant until utility has been switched to thier name. We also now require tenants gas and electric account numbers this gives us access to possible shut off info in the unfortunate situation to protect our property from frozen pipes. All this does not prevent us from being stuck with a tenants utility cost as some or most municipal utility companies in our area Will apply a Lein on property for unpaid utilities even if the utility is in a tenants name .

    • Hey Cindy,

      Yea that’s a great idea about confirming that the electricity is in the tenants’ name before move in.

      Sometimes we are unable to do this because we are still making repairs on the home before our tenant-buyer moves in, but when this isn’t the case, we definitely need to look into this.

  7. Landlords live off of society’s back. They siphon money out of people’s wages, people who create value in society, the working masses in the hundreds of millions. Tenants are their meal ticket. Parasites, all of them. If there is one subsegment of society that I truly hate, it is landlords.

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