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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4 CommentsLeave a Comment

  • Stephanie

    The water bill for my single family rental house is in my name and tenants name is listed as third party. They are not paying the bill. Can I shut off the water since they are responsible and lease states they must pay the water bill?

    • Lucas Hall

      Hi Stephanie

      Absolutely not. You could get into some really deep legal trouble if you shut off the water. Water is an essential utility. It’s best to keep paying the bill so the water company doesn’t put a lien on your house. Then, terminate the rental lease for nonpayment, evict them, and use the security deposit to pay the debt.

      I hope that helps. Please know that I’m not a lawyer not is this legal advice.

      • Jeremy Swallows

        We own house and this is the first, the house has separate owner of water and the sewer, the book out of state the tenant and they say we own like 2,000 and said if we don’t pay put a attachment to the house , this is in Dexter mo 63841 can they do that,, all are other are in city limits and they don’t,
        Thanks jeremy

  • Oscar

    The tenants left a gas/electrical bill (national Grid) of $2200 now because I was the landlord at that time a collection agency is harassing me to pay. Am I liable for that. Is it my responsibility to pay? The account was under the tenants name.

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