Tip #30

Monitor Utility Bills to Prevent Property Liens

Written on June 24, 2013 by , updated on June 11, 2014

Water Termination

The Threat of a Property Lien.

Some essential utility providers are subsidiaries of the local government, and therefore have the power to put a utility lien on your property if the utility bill is not paid.  It can be similar to not paying your taxes. (Booooo!)

In my area, the water and sewer services are provided by the city.  If the water bill at my rental property doesn’t get paid, the government will actually put a utility lien on my property for the amount of the debt.  OUCH!

I Don’t Want to Be on the Utility Bill!

faucetIn an effort to streamline my business, and simplify my life, I make my tenants (99% of the time) manage their own utilities.  However, in this case, I have a good reason to monitor the water bill to make sure the tenant is always paying it.

But I’m Forced To…

The water company in my area is smart enough to require that the property owner stays listed on the bill.  They are more than happy to send a copy of the bill to the tenants, but in the end, they want to make sure I’m on it.  Not only does this put me on the hook for any unpaid balance, but does have benefit of allowing me to prevent a lien from being put on the property if my tenant stops paying the bills.

In my experience, the water/sewer company is the only utility that can put a lien on the property.  However, I suppose the gas or electric  providers might be to do the same thing if they have permission from the town/city.

Other Reasons Why You Should Monitor the Bills:

There also might be other situations where you want to monitor the utility bill.  For example, you may want to add your name to the electric or gas bill if your house is in an area prone to deep freezes.  If the tenant stops paying the heat bills, and the utility provider cuts off the service to your house (though they are not supposed to), the water pipes might freeze causing catastrophic damage.   Yes, your insurance might pay for it, and your tenant could be held responsible, but why go through the hassle in the first place.

Bottom Line:
I find that it’s just easier to keep tabs on the utilities that could hurt me, if not paid.  To accomplish this, I’ll put the utilities in the tenant’s name, and ask the companies to send me a copy of the bill every month.  If they force me to put my name on the account too, so be it.

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