I have inadvertently forgotten to check to see if the utilities have been switched over to the tenant’s name before they moved. This made me wonder what the best solution is for the situation.
The best solution that I came up with was to contact the tenant to see if we can resolve it simply first. If that does not work you should contact a real estate attorney that is familiar with local laws to determine what the next action should be.
disclaimer: this in no way constitutes legal advice and there is no client-attorney relationship between us.
Talk to the tenant first
If the tenant has not moved utilities into their own name. It is likely an oversight by them. Usually this can be resolved by a simple conversation with them. this will be a lot easier if it is successful than any of the other remedies.
In your conversation with them it is important to be polite and professional. Do not blow up or say anything that could be used against you later down the line with the tenant.
It Depends on the State
Every state in jurisdiction has different landlord tenant laws. it is important as a landlord to be educated in these laws. Before conducting an action that could wind up in court. It is a good idea to check with an attorney in your area first.
What Does Your Lease Say?
It is important that your lease is clear on who is paying for what utilities. If your lease is not clear and there's a dispute, most jurisdictions will likely side with the tenant.
Even if your lease says something about turning off services, it is a good idea to check with an attorney in your location before taking such action.
In Some Jurisdictions You May be Able to Stop Services
There are certain jurisdictions that will allow you to disconnect service in your name if it is stated in the lease that the utilities are the responsibility of the tenant.
In Other Jurisdictions This May be an Illegal Self-Help Eviction
In most states it is illegal to shut off utilities after a tenant has moved in. It really does not make a difference what the lease says about the utilities if the state law is clear on the handling of it. Your lease will almost never be able to overwrite what the state law states.
You definitely do not want to get in trouble for an illegal self-help eviction. I saw that in California, there was a $100 per utility, per day fine for turning off utilities on a tenant. This could add up quick.
To illustrate how much you do not want to be on the wrong side of a self-help eviction case here are some examples: Some states have triple damages, some states have $2,500 fines or actual damages, whichever is higher. Some are 3 months rent. Some have these fines plus returning 100% of the security deposit.
Can you Bill them Directly?
If your lease clearly states in your lease that the tenant is responsible for the utilities. depending on your local laws, it may be possible to bill your tenant for the utilities. The good thing about this method is that if they do not pay you will likely be able to post notice for incomplete rent payments. usually this will get the tenant to move on getting service put in their name or to pay you for the service. If it does not you may have to move forward with an eviction proceeding.
Take it Against Their Security Deposit?
In some jurisdictions, this might be allowed or your only option for relief. I do not advise taking it from your security deposit if it can be helped. The problem here is that it sets a precedent that other things can be taken out of the security deposit down the road.
By taking anything out of the security deposit during the tenant's stay, you are opening yourself up to the tenant then using that as justification to take things like late fees out of the security deposit, and there is a chance a judge would side with the tenant.
How Do You Prevent This In the Future?
You can avoid this utility issue in the future by requiring your tenants to transfer utilities 2 their name before giving them the keys. This should be a part of your move in process.
As part of your move in checklist you should get the confirmation numbers from your new tenant of the service request for the utility transfer. You can then verify with the utility company that the service is setup to be transferred.
Wrapping it Up
There are some challenges you will come across as a landlord. What you will find is that in most property management situations, being prepared and having good systems goes a very long way.
If a tenant does not switch utilities to their name before move in, it puts you as the landlord in a tricky situation. Usually this can be resolved, but the method to resolve it depends on your local laws.