Tenant is Always Liable for Utilities, Right? Think Again

If you believe that your tenant is always liable for utilities, you might want to think again.

Philadelphia Gas Works, in the 165 years that it’s powered our sixth largest city, has grown weary of the financial drain caused by deadbeat tenants who skip out on the bills.

Now, it will look to landlords to do something about it.

The rationale: Why pass the cost on to all of Philly’s customers, when it’s the landlords who benefit from the access to gas service on their properties.

This is not an uncommon position. In fact, many utility companies around the country require the property owner, as a condition to receiving service, to sign up as a ‘reverter’, the party that becomes liable when the tenant moves out. Of course, the landlord is also liable for payment of services during any period of vacancy.

But PGW has taken it a step further. With the backing of the state’s legislature, it revived an antiquated law that allows it to levy liens – not on the tenant, but on the rental property itself.

Public comment to the proposed law pointed to the landlord’s dilemma: “If the tenant put the utility in their name and skips, why should the landlord have to hunt them down, or pay it for them, when the service was personal to them?”

But the law was enacted with the lien provisions in place.

Will other states follow suit?

PGW is offering an olive branch: The Philadelphia Landlord Cooperation Program. By applying for the program, the landlord can receive notice of delinquencies and, for now, be protected from the filing of liens during this pilot program. That is, if they register and stay off the “uncooperative landlords” list.

PGW pledges to make “all efforts” to collect from the tenant, but their goal is clear: “We must be paid for gas provided to customers.”

What do you think? Please share you insights below.

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Tags: landlord+liable+for+utilities, utility+liens, avoid+utility+liens, landlords, apartment+owners+associations, landlord+associations

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Filed under: AAOA Forum

This entry was posted on Monday, August 25th, 2008 at 10:08 am and is filed under AAOA Forum. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. carrie said at August 26th, 2008 at 5:25 am

   I have known some pretty nasty tenants who turn on every light, and every faucet and skip out, it could be a month before the landlord knows they are gone…why should a lein be put on a property for this type of vicious behavior, then of course once a tenant skips out…you never find them again to go after them for damages, I think the utility companies should cut them off once they are only one month late and cut their loses. Leave the landlords alone, who spend enough money fixing all the damages they do.

2. Archer said at August 26th, 2008 at 5:59 am

   This is only “legal” until someone formally challenges it’s questionable “legality.” I doubt it really is. Sadly, it’s only a matter of time until electric utilities try the same thing, after all, why not? I’ve known of tenants who skip in the spring after running up well over $1k in electric bills, then boogie after the PUC allowed cutoff date.

   If I were affected by this, I would need to; 1. Add an accounting system that required proof of utility payment or worse yet, direct collection of the utility payment with the rent. Either would be a significant additional cost & staff, which would be passed on in additional rent, AND 2. Increase the amount of security deposit held to cover the inevitable monthly bill that I would otherwise be stuck with. Given the endless supply of $8/hr. Walmart and fast food type jobs these requirements would effectively eliminate yet another 50% of the tenant population from eligibility to rent.

3. jean said at August 26th, 2008 at 6:20 am

   WHAT ARE THESE UTILITY COMPANIES THINKING AS A LANDLORD I CANNOT CONTROL USAGE OR PAYMENT AND SHOULD NOT BE RESPONSIBLE FOR OTHERS USAGE AS IF IT WAS A CONDO. PERHAPS THE UTILITY COMPANIES SHOULD REQUIRE
   DEPOSITS TO ENSURE PAYMENT AND NOT LET THE BILLS GET MONTHS BEHIND BEFORE TAKING ACTION. TO THINK THAT THE
   LANDLORD CAN COLLECT FOR A UTILITY IS RIDICULOUS.

4. Jerald A. Peterson said at August 26th, 2008 at 12:30 pm

   If this is allowed the gas company should also be required to share their profits with all the landlords.

5. Shirley said at August 26th, 2008 at 2:14 pm

   This is ridiculous. Odds are if the tenant left owing a gas bill they also left owing rent. Maybe the gas company should bill the tenant for the landlord’s rent and collect it for them the next time the tenant obtains service. The utility companies already have the right to cut service for non-payment (even in the dead of winter) but landlords can’t just change the locks, we have to go through the court system which takes a minimum 4 weeks start to finish. Our local utility providers are no help at all when we call and ask them questions such as the date the tenant’s service was disconnected (even though it is in our lease that the tenant gives us permission to gather this information) but they have no problem calling us and asking us if we happen to know where a tenant who owes them money moved to.

6. Lucy Fritz said at September 3rd, 2008 at 11:55 am

   I doubt this would stand up legally if challenged.

   We’ve had tenants whose credit is so bad they use the names of others (even their children) to obtain utilities – we find this out after they move out and unpaid utility bills continue arriving.

   As a landlord I would simply show the utility company my lease and prove that the name they were providing utilities to was not the name of my tenant. And if the utility company is going to do such a sloppy job verifying who they are providing service to then they can’t hold us, the landlord, liable. Plus, if the city prevents me from cutting off utilities during the winter, I can’t be held liable for non-payment when spring arrives and utilities can legally be turned off.

   At the end of the day the utility companies do pass these uncollectibles off to the public in the form of higher rates.

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