What to Do If Tenants Don’t Put Utilities in Their Names

By Kaitlin Hurtado on May 25, 2022

Deciding who is responsible for paying utility bills for a rental property relies on a variety of factors. Some property managers will opt to pay for utilities themselves and have the tenant “pay” in the form of a higher monthly rent charge. Others will opt to transfer utility bills to their tenants’ names during their lease.

If you are covering the utility bills, there’s no need to worry about how you are going to get your tenant to cover the bills during the lease. However, if you are expecting your tenants to cover the utility bills, you have options on how tenants can pay for utilities, from them reimbursing you after you pay the bills to transferring the bills to their name when they sign their lease agreement. Keep reading for what you can do as a property manager.

Refer to the lease agreement 

Make sure your lease agreements clearly outlines who is responsible for paying utilities, and what is expected of every party involved. If your tenants are solely responsible for paying all utilities, make sure the lease agreement clearly states that. Innago suggests including language similar to “tenant agrees to have all utilities placed in their name at the commencement of this lease agreement.”

You will also want to consider what utilities are going to e used in the rental properties and who is responsible for paying which ones. Common utilities you will want to address in your lease agreement include:

- Water

- Gas

- Electricity

- Trash (garbage, recycling, and waste removal)

- Heating and cooling

- Internet and cable

Communicate with your tenants regarding the transfer

As clear as your lease agreement may be, your tenant still may have just skimmed through the majority of the lease prior to signing. With that being said, they may not be aware of their responsibility when it comes to paying utility bills or be fully aware of the importance of timing. Your tenant might have overlooked the utility portion of the lease agreement and may be completely unaware they need to transfer the utility bills to their name.

Take the steps to ensure that any possible transfer is executed as quickly (and correctly) as possible. Send a follow-up letter or email to the new tenant that explains the steps of transferring utility bills or any tips and deadlines you may have. Additionally, you may want to make a follow-up call to the new tenant just to talk them through the process and ensure that any transfer is actually complete in a timely manner.

What to do if your tenant doesn’t transfer the utility bill to their name 

For whatever reason, you may experience a tenant not transferring the utility bill to their name as agreed in your lease. It may be an honest mistake, but it also may be the tenant just not complying with the lease agreement. Depending on where you are in the leasing process, you can opt to withhold the rental keys from your tenant until they provide proof that the utility bill has been transferred to their name. If this is something you are doing, make sure it is clearly outlined in the lease agreement so you don’t end up with a surprised and upset tenant ready to move in but unable to due to their utility bill issues.

If the utility bill is in your name, you are likely going to be making the payments until the transfer is in your name. Not paying the utility bill can result in damage to your property and your personal credit score. If you are planning on not paying the utility bill, make sure you are aware of any state/local laws that outline landlord responsibility when it comes to utility bills.

Paying the bills while the transfer is being completed can eliminate other parties getting involved (the city or utility provider) and the situation escalating into a larger issue.

Tenants can still pay utilities if the bill isn’t in their name

Transferring the utility bills to your tenants can be a hassle for all parties involved, especially if they are expected to be short-term tenants. You can keep utility bills in your name and charge the tenants for the bills yourself and cut one step out of the leasing process.

If you are going with this option, you will want to make sure you and your tenant are on the same page about what the payment is going to be. Are they going to be charged for the exact amount reflected in the utility bills (their usage), or charged a flat amount every month regardless of their utility usage? The flat rate charge may be something you opt for if you don’t want to figure out individual usage every month and record everything as the amount will likely change month to month. However, this may result in a loss for you as utility bills fluctuate every season and the flat rate charge may be less than the actual utility bill.

Establishing a tenant’s responsibility in paying utilities as soon as possible can help prevent a possible dispute over unpaid utility bills. With this information in mind, you can be prepared to navigate handling utilities for your rental property.

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