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Who is Responsible for Unpaid Utility Bills?

Written By: Jesse Shaver

Last Updated: 06/17/2024

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Key Takeaways

  • Liability Determination: Responsibility for unpaid utility bills can vary. If the utility account is in the property owner’s name, they are liable. If it’s in the tenant’s name, the tenant is responsible. Some rental agreements may include utilities in the monthly fee, making the landlord accountable.
  • Tenant Actions: Tenants should review lease agreements, document unpaid bills, notify landlords in writing, contact utility companies, understand their rights, seek legal advice, and potentially report to housing authorities if issues persist.
  • Property Manager Actions: Property managers should review lease terms, notify tenants of unpaid bills, attempt to collect payments, understand state laws, and follow legal protocols without violating tenant rights.

When it comes to unpaid utility bills, the question of liability can be complex, as there are multiple potential scenarios for who may be responsible.

Understanding who is responsible for these billswhether it’s the property owner, tenant, or included in the monthly rental – is crucial for both landlords and tenants alike.

Below, we'll explore the scenarios that determine liability for utility bills and offer guidance for property managers dealing with unpaid utilities by tenants as well as tenants dealing with unpaid utilities by landlords or property managers.

Scenarios of Liability for Utility Bills

1. Property Owner’s Name on the Account

If the utility account is in the property owner’s name, they are legally responsible for the charges. Owners who include utilities in the rental fee must account for these costs and ensure payment to avoid service disruptions.

2. Tenant’s Name on the Account

Generally, when the tenant’s name is on the utility account, they are responsible for the charges incurred during their tenancy. This is the most common scenario, as it directly associates usage with the individual accountable for payment.

3. Utilities Included in Rental Fee

Some rental agreements may include utilities as part of the monthly fee. In this arrangement, the landlord is responsible for utility payments. It is then up to the landlord to pay the utility company directly.

What Tenants Should Do

When a landlord or property manager fails to pay the utility bills as stipulated in the lease, tenants should take the following steps:

1. Review the Lease Agreement

Carefully read your lease to confirm that the landlord is responsible for the utility payments. Highlight the specific clauses that outline this responsibility.

2. Document the Issue

Keep a detailed record of any unpaid bills, notices from utility companies, and any communications with your landlord or property manager about the issue. This documentation will be crucial if you need to take further action.

3. Notify the Landlord in Writing

Send your landlord or property manager a formal written notice outlining the problem. Include copies of the unpaid bills and reference the relevant sections of the lease agreement. Request immediate payment and resolution of the issue.

4. Contact Utility Companies

Inform the utility companies of the situation. Sometimes, they may offer temporary solutions or extensions while the issue is being resolved.

5. Understand Your Rights

Familiarize yourself with local tenant laws and protections. Many states and municipalities have regulations that protect tenants from having utilities shut off due to a landlord’s non-payment.

If the issue persists, consider consulting a tenant rights organization or an attorney. They can provide legal advice and assistance on how to proceed, including possible rent withholding or taking legal action against the landlord.

7. Report to Housing Authorities

If necessary, file a complaint with local housing authorities or consumer protection agencies. They can investigate the issue and may provide additional support or enforcement.

By taking these steps, tenants can protect their rights and ensure unpaid utility bills do not unfairly burden them.

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What Property Managers Should Do

When a tenant fails to pay their utility bills, property managers should take the following steps:

1. Review the Lease Agreement

Check the lease terms to confirm who is responsible for utility payments. The lease should clearly outline who is liable for utility bills.

2. Notify the Tenant

If utilities are tenant-responsible and remain unpaid, notify the tenant immediately. Communication should be in writing, specifying the breach of lease terms and any impending deadlines.

3. Seek Payment

Attempt to collect unpaid bills from the tenant first. Offer possible payment arrangements or remind them of the potential impact on their credit score.

4. Understand State Laws

Before taking action, familiarize yourself with state laws and tenant protections regarding utilities. Some states prohibit actions like utility shutoffs by landlords. (And not just state laws! Check your local county and municipality tenant laws, too, as sometimes these differ and may be onerous than what your state laws require of you.)

What Not to Do

Property managers must avoid actions that could violate state laws or tenant rights:

  • Do not shut off utilities, as this could be construed as a retaliatory or illegal eviction action.
  • Do not remove the tenant’s belongings or change locks to push for utility payment.
  • Do not threaten or harass the tenant over unpaid bills.
  • Do not use the tenant's security deposit, as in most states, this is illegal.

Remediation Process

To remediate the situation, property managers should:

1. Save All Your Documentation

Keep thorough records of all communication and attempts to collect unpaid bills as potential future evidence of how you handled the situation properly.

2. Negotiate

Taking legal action can be time consuming and costly. Try first to work with the tenant to negotiate a payment plan to avoid legal interference.

3. File a Claim with Your Local Small Claims Court

If the tenant has moved out and you are not able to make contact with the tenant, you may take the case to small claims court to recover the owed amount.

4. Enlist the Help of a Collection Agency

As a last resort, consider hiring a collection agency to pursue the unpaid balance. But know that taking this route also means you will sacrifice between 20-50% of the money they recuperate from the tenant on your behalf.

Final Thoughts

For those wondering, “Am I responsible for utilities after I move out?” The answer is typically yes if the utilities were in your name during the tenancy. Tenants must ensure all bills are paid up to the end of their lease term or move-out date. Landlords and property managers should clearly communicate utility obligations and follow legal processes when disputes arise. By understanding the correct protocols and legal boundaries, both parties can navigate the resolution of unpaid utility bills efficiently and fairly.

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