Your prospective tenant has completed the application process. They’ve been approved, the lease has been signed and the keys have been handed over.
It looks like you are all set to back away and enjoy the cash flow! Not quite. There is still at least one more thing you need to do when you bring in a new tenant.
You need to transfer the utilities into the name of the new tenants. In this article, we will show how you can go about transferring utilities to new tenants and how you can make the process easy for both you and your new renter.
Why the Utilities Should be in the Name of the Tenant
A vast majority of homes for rent do not include utilities in the rent. When utilities are included, the tenants will have little regard to how much you have to pay.
For example, if the landlord payed the utilities, the tenants would not care how much water they waste, how much electricity they use, etc. They’ll blast the AC all summer, day and night, with no regard to the cost. Meanwhile, you are stuck with the high utilities.
That is a primary reason why most landlords require that utilities be in the name of the tenant. This means that each utility will need to be separately metered in multiple occupancy buildings.
Perhaps to keep things simple, you decide to put the utilities in your name and then just have the tenants pay the bill every month. It may sound like a convenient solution, but many landlords have had a horrible experience doing this. You do not want to make that mistake.
What happens if the tenant doesn’t pay? The bills rack up and sooner or later the utilities will get cut off. The non-paying tenant moves out and all you have is a court judgement for a $500 water bill that you need to pay.
Not fun. So, take our advice and always have the utilities put in the name of the tenant!
Why Landlords Need to Help in the Transferring of Utilities to New Tenants
Technically, it is the responsibility of the tenant to get the utilities transferred into their name. They may need to put down a deposit or supply other financial information.
But, as their landlord, you can make this job a lot easier for them. As their landlord, you or your agent should provide all the information that they will need to transfer the utilities. You should make it as easy as possible for them.
Alternatively, if you decided to hire a property management company to manage your rentals, you could have them help you transfer the utilities to your tenants.
How Do You Transfer Utilities to New Tenants?
An information printout should be given to each new tenant as soon as they’ve been approved. This will give your tenant time to get all the utilities transferred into their name before the move-in. The printout should include the following information:
- Signed authorization document or tenant utility transfer letter that is signed by the landlord or agent authorizing the utility transfer
- Name, address, website and phone number of each utility provider such as:
- Gas – Natural Gas or Propane Providers
- Water and Sewer
- Landline Phone Services
- Cable and Internet Providers
- Previous Account Number: The previous account number for each utility service;
- Utility Providers: A list of preferred utility vendors.
If you own a large apartment complex or a perhaps a mobile home park, you may be able to negotiate a discount on certain utilities such as phone, cable or internet. This can also be an attractive advertising tool to draw in tenants.
In some areas, residents have the option of choosing from several utility providers that offer similar services. It is a good idea to include all of the possible providers on your utility printout. If a tenant is moving from another area in town, they may be able to simply put in for a change of address rather than applying for a new service.
Before you hand over the keys to your tenant, you will want to make sure that the utilities are in their name. They should bring some proof from the utility company.
What if the Utilities Cannot be Transferred to New Tenants?
In some areas, especially in California, the utilities cannot be in the name of the tenants. It sounds like, too many utility companies got tired of chasing runaway tenants and decided to put the financial responsibility back on the landlords.
In areas like Sacramento, for example, the utilities must be in the name of the property owner. If that is the case in your area, then there are a few things you can unofficially do when transferring utilities to new tenants.
Put it in the Lease
You need to make sure that the tenants know they are responsible for all utility charges. This should be clearly defined in the lease agreement.
Talk to your attorney to see what legal provisions are available if they do not pay for the utilities. This may include utility deposits in addition to the security deposit or specific eviction clauses.
Send Them the Bill
If the tenants receive the bill each month, regardless of whose name is on the billing, they will be more likely to pay it on time.
This will also keep you or your agent from having to forward the bills to the tenant in enough time. Just make sure you are also getting a bill from the utility provider so you know it’s getting paid.
How to Transfer Utilities Back to the Landlord?
Most utility companies will allow you the option of having the utilities “revert to owner.” This allows for the easy transition from tenant back to owner.
It will also keep the utilities from being shut off each time a tenant moves out. This will, however, make the owner responsible for any unpaid bills, but it will keep the pipes from freezing or mold from growing.
The Benefits of Transferring Utilities to New Tenants
If you want to dramatically increase your cash flow and force your tenants to take responsibility for their utility use, then make sure that the all of the utilities are transferred to the tenants.
You can help them by providing as much information as possible and then confirming that it has been done before they move in.