Who pays the utilities in a rental property? Public utilities generally are water, sewer, garbage, electric, and gas. This can mean the involvement of one or multiple companies. To complicate matters, government agencies can sometimes control who is responsible for paying a utility. For example, some counties in some states can mandate that the property owner is completely responsible for the water, sewer, and garbage. If the tenant does not pay the utility, it is the landlord's problem. Like many facets of renting investment property, this question does not have one simple answer.
Why keep the utilities running when a property is vacant? The property owner pays the utilities during vacancy. Turning them off can cause problems - vendors cannot complete necessary work to rent the property, landscape can die during drought or dry conditions, pipes can burst during a freeze, it can make it difficult to show a unit properly, and more. Keeping them on is definitely a good practice.
What utilities become the tenant's responsibilities? It depends on the jurisdiction of the property, area rental practices, and more. In most cases, the tenant bears responsibility for most or all of the utility payments unless the rental market or a governing body dictates otherwise. As your property management company, we know that it is important that all parties clearly understand their responsibilities. Therefore, we have a detailed agreement with the tenant prior to the tenant moving into the property and the utility payments clearly outlined in a signed rental agreement.
Why should a property owner not turn off the utilities on tenants? Sometimes situations arise when the property owner may feel the answer to a bad tenant situation is to turn off the utilities - the tenant is not paying the rent; the landlord has given the tenant notice to vacate and they are refusing to move; the tenant is not taking care of the property. This is not the solution to any tenant situation and turning off the utilities is a dangerous practice for any landlord.
The Uniform Residential Landlord Tenant Act (URLTA) requires property owners provide habitability to all residents. Most courts generally view lack of running water, electrical, gas, and/or garbage pickup as an inhabitable condition.
Many states have laws specifically prohibiting turning off tenant utilities; some are more specific and rigid than others. In most states, the landlord may not shut off utilities if the tenant is behind in rent, or force the tenant to move out. The landlord can shut off a utility for an emergency to make necessary repairs, but only for a reasonable amount of time. If the landlord intentionally does not pay utilities and the service turns off, the courts generally view this as an illegal shutoff.
Turning off utilities can provide a tenant grounds to sue the landlord for "retaliatory eviction." This is definitely a dangerous move and can lead to costly legal procedures, large settlements, and or/fines. It is far safer to do an eviction based on non-payment of rent or flagrant violations of the rental agreement. Common sense dictates leaving the utilities on as the best course of action.
Utilities are not always a simple matter. However, they are a legitimate tax deduction for an investor. We will always advise you if of any action needed when a property is vacant or if there is a tenant related problem when it concerns the utility payments. Our first priority is to protect your investment.