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Utilities for Rental Property: What Every Tenant Should Know

If you rent your home, following the terms of your lease is one key to a smooth living experience in your rental home. This includes any responsibilities around home maintenance and utilities.

Renting a single-family home generally comes with different responsibilities than renting an apartment. In an apartment setting, the building management usually handles most maintenance tasks. However, when you’re in a single-family home, you’ll often find that you’re responsible for some basic maintenance activities. These can range from yard work to maintenance items around the house.

Many of these tasks require active utilities; for example, you’ll need water for lawn care, electricity for power tools, a service for trash collection, and possibly gas for heating systems. It’s not just about paying the utility bills; it’s also about understanding how utilities play into your broader responsibilities as a renter in a single-family home.

Who Pays and Why?

When it comes to utilities, the most straightforward scenario for a tenant is to include all utilities in their monthly rent. However, this is relatively rare, particularly in single-family home rentals, for several reasons that pose potential problems for the landlord.

  • Variable Costs: Utility costs can fluctuate significantly, making it difficult for the landlord to predict monthly expenses accurately. Including utilities in the rent would mean the landlord bears the risk of higher-than-average utility usage.
  • Lack of Incentive for Conservation: When utilities are included in the rent price, tenants may not have a strong incentive to conserve energy or water, leading to wasteful usage and higher bills for the landlord.
  • Complex Billing: It becomes administratively complex for landlords to separate utility costs for individual units, especially if the property doesn’t have separate meters.
  • Legal Risks: Landlords may expose themselves to legal risks if they cannot provide utility services for reasons beyond their control. For instance, if a tenant fails to pay the rent, which includes utilities, the landlord cannot shut off utilities without risking legal action.
  • Cash Flow Risks: If utilities are included, landlords may face a financial pinch during months when utility costs spike. This can disrupt their cash flow and make it challenging to maintain the property or pay the mortgage and other bills.
  • Potential for Conflict: Disputes could arise between landlords and tenants regarding what constitutes “reasonable” usage of utilities, especially in extreme weather conditions where heating or cooling costs could skyrocket.

For these reasons, most landlords require tenants to handle utility payments separately from the monthly rent to protect their financial interests and encourage responsible utility usage.

Cutting Off Utilities Can Cost You More in the Long Run

Many tenants are taken aback by the high utility costs they face and might resort to reducing or shutting off their utilities to save money. However, this can result in property damage. Therefore, it’s crucial to read your lease carefully and understand your responsibilities about utilities. Before signing a lease, it’s a good idea to research and find out what utility costs you can expect so you’re not caught off guard.

One common mistake people make when moving out of a rental unit is turning off the utilities. While it may seem easy to cut expenses, it can lead to several problems, such as water damage, frozen pipes, and an unkempt landscape. If the landlord has to turn the utilities back on, you could be liable for additional costs, including repairs and restoration. Therefore, keeping the utilities on until your lease expires or until you are completely moved out is best.

It’s important to avoid the common mistake of moving out while still owing money for utilities. This can create problems for your landlord and delay new prospective tenants’ move-in process. Failing to pay your utility bills can damage your rental history and negatively impact your credit score.

So, whether you’re a long-standing tenant or someone new to renting, being well-informed about your utility responsibilities ensures a smooth living situation for everyone involved. Always manage your utility expenses according to what your lease agreement stipulates.

Both tenants and landlords need to understand that shutting off utilities can create significant complications, even if it seems like a logical step to take when vacating a property. To avoid issues, tenants should always seek the landlord’s permission before requesting a utility company to shut off any utilities. By doing so, tenants can ensure a smooth transition, avoid unnecessary costs, and maintain a positive relationship with their landlord.

Let’s review some best practices concerning rental property utilities to guide you in maintaining a great relationship with your landlord and clarify your roles as a tenant. This isn’t just about rules; it’s about making your renting experience as smooth as possible while being a responsible tenant.

Transfer Utilities Don’t Terminate

First and foremost, as a tenant, you should never disconnect, cancel, or terminate utility services, be it water, natural gas, or air conditioning. While tenants in most single-family rentals are generally responsible for their own monthly utility payments, it’s crucial to understand that you’re also accountable for any damage that might occur to the property due to utility disconnection. This applies whether you’re going out of town, leaving the rental home early, or breaking the lease.

Utility companies and the property owner rely on consistent utility usage to maintain the rental unit’s condition. Interruptions in service can lead to various risks, including damage to the property for which you could be liable. If any damage occurs due to utilities being shut off, the property owner has the right to deduct the cost of repairs from your security deposit. Managing your monthly costs for utilities responsibly not only safeguards you against unexpected expenses but also ensures a smooth living experience for everyone involved.

Understanding the potential damages when utilities are disconnected can help you make informed decisions as a tenant. Here are some key points to consider:

  • A Dead Lawn and/or Landscaping Due to Water Being Shut Off: Tenants often look to save money on their water bill by turning off the sprinkler system. When the water supply is interrupted, your lawn and landscaping will go without hydration. Over time, this can lead to a dry, dead lawn and wilted plants, which could be costly to revive. A dead lawn is an eyesore and could violate community or property management rules.
  • Melted Ice from the Ice Maker Causing Damage to the Floors: Disconnecting utilities often means turning off the electricity, which would defrost your freezer and ice maker. The melted ice can leak onto the floors, potentially damaging them. Depending on the type of flooring, water damage could lead to warping, staining, or even mold growth.
  • The Sump Pump Would Fail to Work During a Rainstorm: Sump pumps require electricity. If there’s a heavy rainstorm and the power has been disconnected, the sump pump won’t work. This could lead to flooding in the basement or lower levels of your rental property, causing extensive damage that can be expensive to repair.
  • Broken Pipes in Winter Due to Lack of Heat: Natural gas or electrical heating is crucial during the winter months to prevent the water in the pipes from freezing. If the heat is turned off, water in the pipes could freeze and expand, leading to broken or burst pipes. The resulting water damage could be extensive, affecting walls, floors, and the property’s structure.
  • No Water for the Cleaning Crew to Do Their Job: If you’re moving out and the cleaning crew comes in to prepare the property for the next tenant, the absence of water will make it impossible for them to clean effectively. This could delay the property being ready for the next tenant and potentially incur additional costs for rescheduling the cleaning crew.

Consistent utility services are crucial for a smooth move and to avoid additional costs and complications.

There will often be a reconnect fee when the landlord has the utilities turned back on. In addition to the damages, this fee can also be taken out of your security deposit.

Help for Tenants

If you’re a tenant having trouble paying your utility bills, you’re not alone; help is available. Look into local utility assistance programs that can help you cover costs like electricity and heating. These programs are usually easy to apply for, but you might need to show that you need the help. These programs can save you from late fees and keep your utilities running.

Here are several programs aimed at helping tenants who are struggling to pay their utility bills. These include federal, state, and local government initiatives and programs run by utility companies and nonprofit organizations. Here are a few examples:

  • LIHEAP (Low Income Home Energy Assistance Program): This federal program provides financial assistance to low-income households to manage their energy bills.
  • Payment Plans: Some utility companies offer flexible monthly payment plans for those who can’t pay their entire bill at once.
  • Charitable Organizations: Organizations like the United Way or Salvation Army sometimes have funds dedicated to help with utility bills.
  • Local Government Assistance: Many local governments also have emergency relief funds for utilities, especially during extreme weather conditions.
  • Discount Programs: Some utility companies offer discounted service for low-income households.
  • Utility Relief Grant: Some states offer grants to tenants to cover the costs of utilities, often as part of emergency relief services.

Do your research before signing a lease. Falling behind on utility payments can hurt your credit score and relationship with the landlord. Seek help proactively to avoid problems.

If you can’t pay your utility bills and don’t qualify for assistance programs, talk to your landlord. You both have a shared interest in keeping the property in good shape. Working together on a solution is a smart move.

Protection That Landlords Should Take

While the utilities shouldn’t be disconnected, the unfortunate fact is that it still can happen. Tenants cancel the services instead of transferring them, or unpaid utility bills pile up, resulting in the utility company shutting them off. For this reason, landlords should proactively take steps to help protect themselves and their property.

Here’s a look at a few things that landlords can do:

  • Turn on Third-Party Notifications – Third-party notifications allow the landlord or property manager to be copied on communications between tenants and the utility company. This will alert them if the utilities will be shut down, canceled, suspended, or transferred.
  • Have the Utilities Revert to Owner – Setting up the utility account to revert to the landlord helps eliminate the gap left when tenants leave. It also means there should be no reconnection fees, enabling landlords to always be in the know.
  • Outline Requirements in the Lease – Finally, and perhaps most importantly, landlords should always protect themselves with an airtight lease outlining a tenant’s responsibilities, requirements, and consequences for nonpayment. A violation of the rental agreement that damages the property could result in the landlord being able to apply part or all of the security deposit toward the damages.

Here is a look at some important lease clauses that should be included in the lease:

  • A list of all utilities that tenants are responsible for
  • The stipulation that tenants are not permitted to have the utilities shut off
  • A requirement for tenants to place the utilities in their name effective the first day of the lease
  • A stipulation that a tenant’s failure to place the utilities in their name is a violation of the lease
  • A provision that the tenant agrees that a copy of the lease may be provided to a utility company and that the landlord is entitled to receive delinquent billing or cut-off notice from the utility company without the consent of the tenant
  • A stipulation that if, for any reason, a tenant has the utilities turned off, the landlord can charge a reconnect fee for each utility, plus any utility company charge
  • A stipulation that failure to pay the utilities is considered to be a violation of the lease
  • A stipulation that if the utility company does not allow the tenant to place the utilities in their name and bills the owner or landlord, the landlord will provide a copy of the utility bill to the tenant and the tenant must pay the landlord.
  • A stipulation that tenants can and will be evicted for non-payment of utilities
  • A stipulation that, should the tenant leave before the lease is up, resulting in the landlord being required to pay the utility bill, the amount can be taken from the security deposit

In many cases, if there is an outstanding balance on the account, the utility company will not provide services to the next tenant, and in some cases, the landlord, before the balance has been paid. For this reason, any outstanding balances the tenant owes should be pursued.

Note: Just as tenants should avoid turning off the utilities at the rental property, landlords should also. While some landlords may be tempted to shut off a tenant’s utilities due to a violation of the lease or in an attempt to force an eviction, in almost every situation, this is against the law, and doing so could result in the tenant taking legal action against the landlord. Landlords need to ensure that they refer to and abide by the eviction laws in their state.

Utilities for Rental Properties: Best Practices for Tenants

As a responsible tenant, staying informed about utilities is essential to fulfill your obligations and maintain a positive relationship with your landlord. In case your landlord overlooks providing utility information, you can proactively follow these best practices to ensure a seamless experience.

Ask Questions

If you have any questions regarding your rental agreement or concerning your utilities, it’s important that you ask your landlord. Always ask questions about utility services and the billing process before you sign the lease.

Here are a few good questions to ask:

  • Are the utility accounts in the tenant’s name or the landlord’s?
  • Which utilities does the tenant need to set up?
  • Are there preferred providers for each utility?
  • What is the contact information for each of the utility providers?
  • Are there any outstanding utility charges on any of the account
  • What kind of heating is in the unit?
  • Where are the thermostat, fuse box, and hot water heater located?
  • Who is in control of the temperature settings?
  • When is the heat turned on?
  • Does the landlord charge a fee for any late or unpaid utilities?

Know Your Responsibilities

The term utility refers to several different services. Standard utilities include electricity, gas, water, sewer, and garbage. Other services such as phone, cable, and internet –are additional amenities. Tenants are generally responsible for most utilities in single-family rentals. However, in some cases, landlords may cover the cost of utilities that are required but fall outside of the scope of what we would consider standard utilities; this includes things like Internet service or security system subscriptions. It’s important to note that each rental agreement varies, so it’s crucial to clarify which utilities are your responsibility.

Set Up Your Utility Accounts Promptly

Transfer the utilities into your name as soon as possible upon moving in. In some cases, you may even be able to schedule a utility transfer before you move in. Note that as a tenant, you are only responsible for the utilities you use during your tenancy.

Pay Your Bills on Time

Paying your utilities promptly and on time is important. It’s also a good idea to keep documentation of the payment and any communication between you and the utility company and/or landlord in reference to your bills. By keeping current with your bill, you will reduce your chances of running into problems. Tenants behind on utility payments should contact their utility provider to resolve the issue quickly.

Take Action to Resolve Utility Disputes Quickly

The key to resolving most disputes is documentation. If your utility company has a problem with your payment or lack thereof, having the proper documentation to prove that you did make the payment can help to keep you out of trouble. If you have a problem with your bill, take steps to reconcile this quickly so as not to incur any late fees and to avoid disruptions with your services.

At the end of the day, utilities are usually the tenant’s responsibility, but ultimately, the rental is the landlord’s property. Because of this, any damage caused by or expenses incurred from shutting off utilities or failing to pay can usually be taken directly from the security deposit.

Tenants –if you have any questions regarding the utilities for your rental property – don’t hesitate to ask your landlord or property manager. Being well-informed on your rights, as well as your responsibilities as a tenant is vital for ensuring that you abide by the terms of your lease and can help to save you from a tremendous amount of money –and hassle.

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