One of the big hassles for landlords with turning over an apartment from a previous tenant to a future tenant is what happens to the utilities in the meantime. Common utilities in rental units include electric, gas, water, sewer and garbage. In some instances, landlords have all the utilities for a rental property in their name and charge a slightly higher rent that includes utilities. This way, there is no conflict with starting and stopping accounts with the utility companies.
More frequently, landlords expect the tenant to put the utilities in their own name upon moving in, and end the account when they move out. But what about the time between tenants, which might be only a day or two or stretch out to weeks or even months?
That’s where a revert to owner agreement can make things stress-free and easy for landlords everywhere.
What is a Revert to Owner Agreement?
Also known as a landlord interim billing agreement, this is a contract with the utility company that ensure the utility account will automatically revert to the landlord’s name in between tenants. It ensures the continuance of the service so that nothing is shut off when the property is not occupied.
The landlord, property manager or owner must sign up for the utility then all utility billing information is put in the landlord’s name. When a tenant signs up for the utility, the billing is put in the tenant’s name and the tenant is responsible for the bills. Upon notification that the tenant is moving out and cancelling the utility, the utility billing reverts back to the landlord.
5 Landlord Benefits of Revert to Owner Agreements
There are several benefits of setting up a landlord interim billing agreement, most importantly that the service to the property is not interrupted, which could cause problems with the rental property.
Here are 5 benefits of setting up such a plan:
- Convenience—Once the landlord signs the contract with the utility company, everything becomes automated. In other words, the transfer of billing between tenants is done automatically and the landlord does not have to notify the company of move-ins or move-outs. Most utility companies also offer online billing, online account access and even email notifications.
- Consolidation–Many utility companies allow landlords with several properties to consolidate all their billing into one monthly statement that is itemized by property.
- Cooperative—The arrangement can also allow an owner of a property to authorize a landlord or property manager to make any changes to this account and make adjustments. This puts the power into the hands of the person who can make decisions without bothering the owner, if that is the desire.
- Cost—Most arrangements include no charge by the company to perform this type of service. It also saves landlords money in not having to deal with any issues or problems in the rental unit that might result from disconnected utilities (such as having no water in the unit for the cleaning crew to do their job, or pipes freezing because the gas heat to the property has been interrupted) .
- Contract—The completed form is considered a contract between the landlord and the utility company, so there is safety and security for both sides in executing the arrangement.
If a property’s information changes, it is up to the landlord to notify the utility company. Similarly, if the landlord sells the property or adds additional properties, he or she needs to relay the new information to the company.
Examples of Utility Company Agreements
Many utility companies across the country have some kind of revert to owner agreement for landlords, although they might go by different names. Here are just a few examples with different utility companies:
Westar Energy: Revert to Owner Agreement
KCP&L: Landlords Transfer of Service Assistance
Michigan Gas Utilities: Landlord Revert Agreement
Duke Energy: Online Property Management Portal
To see if your area utility company offers such a service, check out their website and look for a link to something with a similar sounding title that has to do with landlords, property owners and transferring or reverting utilities. If you still don’t find any information, call and speak with a customer service representative, who would be happy to help out.
Gain Utility Knowledge Now
Landlords, tenants and utilities can combine to create some interesting conflicts, especially when tenants don’t keep up on utility payments. It’s always a good idea to educate yourself on what the utility company’s policy is for shutoffs, late payments, non-payments and so forth when it comes to rental properties. Always be clear in the lease agreement about utility responsibilities and the consequences of non-payment.
In many instances, the landlord or property owner is ultimately responsible for all unpaid utility charges, even if the utility account is in the tenant’s name. Many companies include a service where they will notify a landlord of the tenant’s delinquency, while others will only do this upon a landlord’s request. Because every company is different, it’s critical for landlords to know what the possibilities and scenarios are concerning tenants and utilities, long before it’s too late.
The landlord revert to owner agreement benefits all add up to mean that landlord interim billing agreements ease stress during turnovers, free up time coordinating utilities when between tenants and saves time on the phone and online. It’s an important service that rental property owners and landlords should take advantage of as part of an overall property management strategy.
Do you have a revert to owner agreement set up for any of your properties? Please share this article and let us know your experiences in the comments section below.
I was going to do this revert to owner agreement, but I was under the impression that the tenant could stop paying their utilities and then it would revert to my name and once that happens, I cannot have the utility disconnected because of tenant rights. Does anyone know anything about this?
The utilities would revert to your name Donna. Which in some cases would not be a bad thing, but I understand your concern. From a landlords perspective, I would include language in my lease that addressed utilities. Non payment of utilities would be a violation of the lease and grounds for eviction. If anything this can be a way to spot an eviction before it happens if you see the writing on the wall, so to speak.
Thank you for this article. I have two rental properties and I have been stumped on how to handle this exact problem. Since my tenants at both properties have their own agreements with the utility companies do I have to wait until the lease is us to implement the Revert To Owner contract?
Nickolas, I think it would depend on the utility company, but I see no problems with changing the account in mid-lease so long as the tenants agree. If everyone is on-board then the utility company would just need to change the account over. For the tenant, I would just explain that there will be no changes whatsoever and this was necessary to manage the property. You should have no problems, but let me know how it turns out.
I had a revert to owner in 1999, first they were to contact me when it reverted to me. (electric co.) I sold the house in 2002. Now i am getting told I am to pay a bill on it. wouldn’t it being sold nullify a revert to owner contract?
Bev, I guess it would depend on whether or not the electric company knew about the sale and changed the contract. If they were never notified (by you) they would have no way of knowing that the revert to owner agreement should no longer include you. I’m not sure your legal obligation to pay as it would be based on the contract, but part of me thinks you may end up being held responsible.
Let me know how it works out.
Euna, check out the IRS website and search for the form. They have everything there.
I consulted with management if I should have electrical services turned on and requested date and apartment number to have services turned on before move in date. Management told me to have services turned on at least three days before move in and gave me the apartment number. Three weeks later I was still waiting on a decision for my application to lease. My application to lease was denied and now Im stuck with a utility bill on an apartment that I never lived in. Is this legal ? Can a suit be brought against the property for theft of services?