Landlord Stuck With Tenant’s Unpaid Utility Bill

by | Dec 6, 2010 | Rental Property Management Tips

Q: Is there any recourse for landlords not to get stuck with utility bills. – TVS Landlord

It’s been a few times that tenants move in a property, residential or commercial, sign up with the utility companies and then a few months before they leave they call the utility (like Hydro or Enbridge Gas) tell them that they are no longer responsible for the utilities and later on I find out that as the landlord I’m stuck to pay their outstanding bills.

When I contact the utility companies they say as the landlord I have to pay it and then bring the tenant to court to collect (in other words I just became a collection agency for these companies).

I live in Ontario, so unfortunately here there is no way to have a deposit from the tenants.

As far as residential rentals go, a landlord can agree to provide utilities and apply a portion of the rent payment, or the tenant signs up for an account directly with the utility and pays the fees to them. In that case, the tenant has some incentive to pay because it could hurt their ongoing relationship with the utility.

For example, Enbridge allows tenants to make payments directly to their own account, which they then transfer to their next property when they move. An Enbridge spokesperson told us that if a landlord contacts them, the landlord’s name can be noted on the account as the property owner, and an Enbridge employee will call the landlord if the tenant asks to transfer the utility out of his or her name. That may not avoid liability as the property owner, but it would give the landlord some advance notice that the tenant is trying to transfer the account before it’s time for them to move.

We would love to hear from other Ontario landlords regarding whether they’ve had similar experiences.

Without a deposit, you likely will have to take legal action to collect outstanding expenses from your tenant. Ontario’s new metering law takes effect soon. These rules may impact a landlord’s rights and responsibilities regarding utilities. One change that is likely: a landlord with meters (where tenants pay direct) may not have the ability to apply to the Board for the outstanding utilities as “unpaid rent”.

We recommend that you contact Ontario legal expert April Stewart with Landlord Legal (705-812-2267) to find out your best course of action.

The tenancy agreement should include a provision that states who is responsible for each of the utilities. You can accomplish this via a checklist marked “landlord” or “tenant” for each item, or you can simply state “tenant shall be liable for…” and indicate the responsibilities, then do the same for the landlord.

In addition to the lease provisions, be sure to keep records of all communications with the tenant and with the utility companies regarding the expenses, and all bills and records of payments, because it will be the landlord’s burden to prove the expenses in court or before the Board.

Keep in mind that landlords do have power to make their tenants pay rent on time. Tenant Verification Service, a credit reporting agency, offers landlords the ability to Report Tenant Pay Habits. Good tenants reap the rewards of a solid rental payment history, while bad tenants will think twice before becoming habitually late payers. See Report Tenant Pay Habits for more information.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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