When a tenant rents a unit from a landlord, the agreement they sign will dictate how they can use the apartment and what fees they’ll need to pay along the way. While landlord-tenant relationships are determined by state law, there’s always a possibility that disagreements will arise. One area of disagreement may involve the responsibility of paying a past-due utility bill.
For example, let’s say that a tenant leaves their unit without paying a utility bill for electricity or water. In this situation, the landlord and tenant may disagree about who should make the outstanding payment. The regulations that state which party is responsible can vary based on location and the type of account. The main utilities that are used in an apartment include the following:
- Sewage
- Electricity
- Gas
- Garbage
- Internet and cable
- Water
Since cable and internet are considered non-essential, the tenant is almost always tasked with paying the bills. However, responsibility for the remainder of the utility bills may vary. When looking specifically at California law, landlords are directly responsible for providing tenants with access to utility services.
Even if the tenant doesn’t pay rent, the landlord is unable to shut these services off. For the most part, California is a tenant-friendly state. However, lease documents can detail which party is responsible for paying the many different utilities. The following guide explains how to set up utilities when renting and which party is responsible for covering unpaid bills.
Legal Framework
California doesn’t have laws that directly state if the landlord or tenant should pay for utilities. The utilities that landlords must pay depend on the rental agreement. Landlords in California often cover trash and water. They may also pay for gas. Before a tenant signs a lease agreement, they need to review it to determine which utilities they’re responsible for paying.
As for water and other utilities, California doesn’t provide any requirements. However, tenants have specific rights in this regard. Since a tenant is considered a customer and a consumer in California, they must have access to essential services.
Are Landlords Required to Pay for Utilities?
Landlords have specific obligations regarding utilities. For example, let’s say that the renter pays the landlord for utilities, after which the landlord gives the money to the utility companies. In this arrangement, the landlord will be responsible for paying utilities even if the renter doesn’t pay. However, there are different rules for the water bill.
Based on California law, gas and electric meters are governed differently if they are shared between units. However, sewage and water aren’t part of these laws, which means that the lease agreement will need to list who pays for the utilities.
Keep in mind that water can be disconnected if no one pays for it. Landlords often pay for water, trash, and sewer because they are required to provide tenants with habitable living spaces. If water bills aren’t paid, the landlord could be held responsible. If you’re considering buying a rental property, make sure you create clear and highly detailed lease agreements.
Tenant Rights Regarding Utilities
In California, tenants have certain rights regarding utilities, which include the following:
- Right to fair pricing
- Right to understand how much they’re paying
- Right to protection from nonpayment consequences
- Right to apply for medical assistance with utilities
The right to a fair price means that landlords need to charge the same amount to every tenant who’s paying for utilities. While landlords are allowed to ask for a small fee for these utilities, it must be reasonable.
Tenants in California should also receive comprehensive and detailed utility bills if they make payments directly. If a landlord doesn’t provide this info, it’s possible that they’re violating tenant rights.
Before a lease agreement is signed, landlords must inform tenants how utility meters are measured. Every utility bill that a tenant receives must include meter readings from the start and end of the current payment period.
The right to protection from issues of nonpayment means that a tenant won’t be responsible for a payment if the utility bill isn’t in their name. When utilities aren’t legally attributed to a tenant, they won’t be held accountable if payments aren’t made. If the landlord fails to make a necessary utility payment, the tenant won’t need to pay late fees.
The right that the tenant has to apply for medical assistance means that utility companies must provide certain benefits to people who require at-home medical equipment. However, tenants need to provide proof that they require life support care. A tenant who requests this form of assistance will need to pay the utility bill directly.
Key Utility Responsibilities
Landlords and tenants have responsibilities that must be met when it comes to paying for utilities.
Responsibilities of Landlords
Landlords in California are required to ensure access to utilities and charge only actual costs. While landlords regularly charge tenants directly for utilities, they can choose to provide a utility allowance. This type of allowance is used by some landlords to appeal to qualified tenants.
If a tenant knows that they won’t need to pay for utilities, they may be more likely to apply. Providing a utility allowance to existing tenants can reduce turnover. Any charges a tenant receives for utilities must reflect their actual usage, which means that they can’t exceed the cost that the landlord incurs.
Responsibilities of Tenants
While tenants have some protection under California law, they also have certain responsibilities. For example, a tenant must understand their payment obligations, which is why it’s crucial that they read their lease agreement before signing it. They’re also tasked with maintaining timely payments. Tenants can be evicted if they don’t pay on time.
Managing Utility Payments
When creating lease agreements for tenants, make sure you specify how utility payments will be made. It’s also important that you detail how usage is determined for utilities that involve meters with multiple units. Focus on transparency when writing about utility payments.
If your existing lease agreements are lacking in this regard, consider updating the documentation. If you make any verbal agreement with the tenant about who will pay for utilities, you must document this information clearly. Otherwise, the tenant could eventually make a legal dispute.
Common Scenarios and FAQs
Who is responsible for unpaid utility bills?
Unpaid utility bills must legally be paid by whoever has their name on the documents. If your tenants give you money directly for utilities, you’ll likely be responsible for covering these payments. If a tenant doesn’t pay, you may need to pocket the loss. You can avoid this issue with clear lease agreements. Because of how unclear California law is about water, landlords often cover the cost themselves.
Can landlords withhold security deposits for unpaid utilities?
Landlords aren’t allowed to withhold security deposits if tenants don’t pay their utility bills on time. They can only withhold these funds for the reasons listed below:
- Unpaid rent
- Cost of fixing damages beyond the typical wear and tear
- Expenses associated with cleaning the unit after the tenant moves out
What happens to utility payments between tenancies?
If a tenant has recently moved out and you have yet to find another, you’re responsible for paying all utility bills. While you can turn off certain utilities, it’s a time-consuming process that most landlords avoid.
Can landlords restrict water usage in California?
Landlords are unable to limit the amount of water a tenant uses in most cases. If, however, a severe drought occurs that leads to the governor stating that water consumption must be reduced, landlords can restrict water usage. However, these restrictions must be communicated to the affected tenants.
Best Practices for Landlords
When handling utilities at your rental building, set clear utility policies that any tenant can understand. List each utility and the party responsible for paying it. Before finalizing the language in a lease agreement, read it aloud to identify and revise any vague language. Transparency is crucial in billing. It’s also highly recommended that you maintain open communication with your tenants. If they have any questions about their utility payments, clarify them immediately.
Conclusion
When you invest in a rental property, you’ll need to create lease agreements for the tenants who apply. California law dictates that most of the details about utility payments should be placed within the lease agreement. By creating detailed agreements that clearly explain who pays for each utility, you’ll be able to avoid legal issues and make sure all utilities are paid on time. Before signing a lease agreement, landlords and tenants should understand their rights and responsibilities.