Property Management Blog

Best Practices for Managing Tenant Utilities for a Rental Property

Jonathan Maloy - Friday, March 15, 2019

Utilities can be a complicated part of renting out a property in Florida. Water and power utilities are managed by local governments, and there are fees and expenses associated with stopping and starting utility service. You have a few options when it comes to managing the utilities in your rental property, and the option you choose really depends on the type of property you own.

Single-Family Homes and Utilities

Typically, tenants are responsible for paying their own utilities in a single-family home. Your lease should require that tenants set up utility accounts in their own names. You can ask for the account numbers in case you need to get in touch with a utility company about an issue at that property during the tenancy. This keeps things simple for you and for your tenants. They receive the utility bills and they pay them based on what they use. When a tenant moves out, you’ll need to switch the utilities back into your own name so that they aren’t shut off. You’ll need to have water and electricity when you’re making repairs, cleaning up the property, and showing it to potential tenants.

Multi-Family Homes and Utilities

With a multi-family home or a small apartment building, it may be more difficult to separate utilities by tenant. For electricity, you can still require tenants to set up their own accounts and pay their own bills. For water, trash, and sewage, however, you may want to pay the utility bill for the entire property and then charge tenants for those services every month. This allows you to maintain control of a service that extends to more than one unit, and you can also have all of your tenants contribute to the cost of communal trash collection, irrigation systems, and water usage.

Make Things Clear in Your Lease Agreement

It’s important to be clear in your lease agreement who is responsible for which utilities. Generally, tenants should have to pay for the utilities since they’re the ones using electricity, water, etc. However, if you’re in a competitive market or you’re worried about utility bills going unpaid, it may be more desirable for you to keep the utility accounts in your own name, and then charge the tenants with their rent every month. Whichever way you choose to go, make sure you have it documented in your lease. That’s the first place tenants will go if they have a question.

What You Cannot Do with Utilities

managing-tenant-utilitiesIf your tenant is not paying rent and you’re having trouble with the eviction process, you may be tempted to turn off the utilities. This is illegal and you cannot shut off a tenant’s water or power, even if they haven’t paid the rent or the utilities in months. You have to go through the proper legal eviction channels. Taking matters into your own hands by turning off the electricity or the water will only result in a legal nightmare for you, and an expensive judgment against you.

If you have any questions about utilities and how to have tenants pay them, please contact us at Rentals by Mark.

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