When you’re dealing with many properties and tenants, you’re bound to end up in some situations where you aren’t sure what you are and are not responsible for.
One situation that happens more commonly than you might think is when a tenant moves out without paying all of the utility bills, or perhaps they haven’t been paying them for months! Is a landlord responsible for the tenants utility bills?
In this situation, you might be at a loss for what to do. Do you pocket the loss? Do you track the tenant down?
What you don’t need to do is panic. Because this is a fairly common situation, there is a simple protocol that you can follow to find out if you are responsible for these bills or not. Everything is situational based on your location, so keep that in mind as you read our guide to handling this awkward situation when there are unpaid utility bills by tenants.
A Table of Contents for Unpaid Utility Bills By Tenants
Who Pays The Bills?
In most areas, there is no official rule about who has to pay for utilities. While some areas might recommend that the landlord covers certain utilities, it is by no means required for them to do so unless stipulated by local law.
This means the tenant might be paying for all of the utilities directly, or the landlord might be paying for some of them.
Either way, there is a single name that is registered with the utility company for those bills and payments! When it comes to dealing with unpaid rent, the name that is registered is the most important thing to consider.
Look At Your Lease
If you’re unclear about who agreed to pay for what or you set up a different arrangement regarding utility payments, take out your lease and take a closer look at it. What does it say that the tenant is responsible for? Does it say that you are responsible for any utility? Did you include a clause about unpaid utilities?
You probably already know all of this information, but it is important that you review the exact terms that you agreed upon with the tenant so that neither party is assuming anything that wasn’t necessarily written in the contract.
Paying Off Unpaid Bills
Let’s say that you have a tenant that moved out of one of your properties. Without realizing that they hadn’t paid all of their utilities, you released their security deposit and will likely never hear from them again.
Is a landlord responsible for tenants utility bills? Are you now liable for these overdue costs and fees?
While it may seem like a fairly straightforward question, there are a few different answers depending on the specifics of the situation.
If the utilities are in the tenant’s name…
Then the chances are good that you cannot be held responsible for these fees.
Here’s why. The utility companies have records that show that the tenant who was living on the property is responsible for paying the fees. This means that they are the ones who are legally bound to pay the company, and you are not.
The utility company will be responsible for filing a lawsuit to get their money from the tenant if the tenant is unwilling to pay.
It’s important to note here that this law is state-specific so you will want to confirm that the state you work in does not hold landlords responsible for this type of situation. The majority of states have a law that states as much.
If the utilities are in your name…
This situation is less likely to occur because you would be in-the-know about whether or not your tenant has paid, but it is still worth going over this information to figure out your situation.
If the utilities for the property are in your name and the tenants were paying you directly for the utilities, you are likely going to be held responsible for the cost.
The reason for this is that your name is the one that the utility companies have, not your tenants. Even if your tenants were supposed to pay you and didn’t, the utility company doesn’t care about that. You will have to pay off the fees as written by the company.
If the tenant skipped out on you and left behind huge bills that you had to handle, you may want to consider taking them to small claims court to get some of that money back. Other than doing this, there is really no way for you to get this money back. You will simply have to pay for it.
If the utilities are shared between you…
If you are living in a situation where there is a shared metering system between multiple tenants or between you and your tenants, figuring out what to do with unpaid utility bills gets a lot more complicated.
The basic fact is the person with the name on the contract with the utility company is responsible for ensuring that the bill gets paid. If someone else has signed an agreement to pay some portion of that money to the contracted person, any dispute about that payment must be handled in small claims court.
Hint: Don’t use the security deposit!
Even if your tenant left without paying off their utility bills or without paying you the final amount that they were contracted to pay you, you cannot take this amount out of their security deposit in most states.
If you do this, the tenant can actually come after you for improperly withholding their security deposit. Do not let yourself be put into that sticky situation!
As a landlord, it can be confusing and frustrating to figure out what you are and are not responsible for when a tenant turns out to be irresponsible and unwilling to pay.
But when it comes to unpaid utility bills, you might be safe from being held responsible for any missing payments:
- Check the lease terms to see who is responsible
- Confirm with the utility company who is registered on the property
- Take the tenant to small claims court if they were supposed to pay you and didn’t
- Do not withhold the security deposit
With this protocol, you can ensure that you are not paying off any leftover bills that you are not responsible for. Even if the bills were run up on your property, you probably don’t have to pay them – and you shouldn’t!
In the future you may want to consider looking into a landlord utility account. You can learn more about this service here.